Page 289 - Accounting Principles (A Business Perspective)

7. Measuring and reporting inventories

available for sale to obtain the USD 509 cost of goods sold. Note that you can 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, and the USD 181 ending inventory is a current asset on the balance sheet.

The specific identification costing method attaches cost to an identifiable unit of inventory. The method does not
involve any assumptions about the flow of the costs as in the other inventory costing methods. Conceptually, the
method matches the cost to the physical flow of the inventory and eliminates the emphasis on the timing of the cost
determination. Therefore, periodic and perpetual inventory procedures produce the same results for the specific
identification method.

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