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Using FIFO, you calculate the cost of goods sold expense as follows: In short, you use the first three units to calculate cost of goods sold expense. The cost of the ending inventory asset, then, is $106, which is the cost of the most recent acquisition.The $412 total cost of the four units is divided between $306 cost of goods sold expense for the three units sold and the $106 cost of the one unit in ending inventory.The total cost has been accounted for; nothing has fallen between the cracks.he $412 total cost of the four units is divided between $306 cost of goods sold expense for the three units sold and the $106 cost of the one unit in ending inventory. The total cost has been accounted for; nothing has fallen between the cracks.
Let's say the investor sold 20 shares. With FIFO, the cost basis will be recorded as (10 shares x $100/share) + (10 shares x $120/share) = $2200.With LIFO, the cost basis for 20 shares will be translated as (15 shares x $150/share) + (5 shares x $120/share) = $2850.or example if an investor bought 10 shares of ABC company for $1000 plus $10 trading fee and received dividends of $200 in year one and $400 in year two, cost basis would be $1610. If he or she then sold the stock in year three for $2000, the taxable gain would be $390.