Which inventory method assigns cost based on the specific identification of each unit?

The inventory method that assigns cost by identifying each unit individually is the specific identification method.

Instead of assuming that identical-looking goods came from a particular purchase layer, this method tracks the actual cost attached to each item. Ending inventory is calculated from the purchase cost of the specific units still on hand, while the cost of goods sold reflects the identified units that were sold.

The approach is especially practical for items that are unique, expensive, or individually traceable, such as automobiles, jewelry, artwork, real estate, and specialized machinery. A vehicle dealer can match each car’s stock number and invoice cost directly to the car remaining in inventory. The method would be cumbersome for thousands of interchangeable cans or bolts.

Specific identification can produce a different profit figure from FIFO or weighted average when purchase prices change. It also requires reliable records and can create room for judgment when management chooses which tracked units were sold. FIFO assigns costs by presumed purchase order, while weighted average blends costs; neither requires the same unit-by-unit matching.