In one sentenceAn inventory costing method that assumes the most recently purchased quantities are sold first. It is not permitted under International Financial Reporting Standards.
Simply put
When selling, you charge cost of sales at the latest purchase price, and inventory stays at the old prices.
The international standard IAS 2 does not permit it, and the Kingdom applies the international standards endorsed by SOCPA, so use weighted average cost or FIFO. You may see it in old books or in other countries' rules.
Worked example
A store bought 100 boxes at 10 SAR, then 100 boxes at 12 SAR, and sold 100 boxes.
Cost of sales under LIFO100 × 12 = 1,200 SAR
Cost of sales under FIFO100 × 10 = 1,000 SAR
Remaining inventory under LIFO100 × 10 = 1,000 SAR
Cost of sales under LIFO (not permitted under IFRS)1,200 SAR
Don't confuse it with
First in, first outFIFO sells the oldest first and is permitted, while LIFO sells the newest first and is not permitted under IFRS.