The specific identification inventory valuation method is used to track each and every item in your inventory individually. This includes the time it enters the inventory until the time it leaves it. Let’s not get confused here, specific identification is different from LIFO and FIFO. LIFO and FIFO groups pieces of inventory together based on when they were purchased and how much they cost, while specific identification identifies and tracks every piece of inventory individually. The specific inventory method tags or marks each item with its purchase cost and any additional costs that are incurred in the transformation process until it is sold.
Why Use Specific Identification Valuation?
Before we do that, we need to remind you to always speak with a CPA, professional accountant or an accounting attorney. While we can share information on this method of valuation, they can give you specifics that will fit your needs.
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