Q. Specific identification method of inventory?

Specific identification- The specific identification method of inventory costing put together the actual cost to an identifiable unit of product. Firms find this method simple to apply when purchasing and selling large inventory items such as autos. Under the specific identification method the firm have to identify every unit in inventory unless it is unique with a serial number or identification tag.

Note that you are able to also determine the cost of goods sold for the year by recording the cost of each unit sold. The USD 509 cost of goods sold is an expense on the income statement as well as the USD 181 ending inventory is a current asset on the balance sheet. The specific identification costing method put together cost to an identifiable unit of inventory. The method doesn't involve any assumptions about the flow of the costs as in the other inventory costing methods. Theoretically the method matches the cost to the physical flow of the inventory as well as eliminates the emphasis on the timing of the cost determination. Consequently perpetual and periodic inventory procedures produce the same results for the specific identification method.