The specific identification method

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Under IFRS, the specific identification method can be used to assign costs to inventory items if they can be specifically identified. However, if items cannot be specifically identified, then a cost formula method such as FIFO or weighted average must be used. The method used should reflect the actual flow of goods and result in the most accurate measurement of income. It is not appropriate to select a method based solely on the desire for a higher or lower net income. Under GAAP, the specific identification method is allowed but is generally not practical or cost-effective for most companies.

The Specific Identification Method