Teacher models Specific Identification step by step using a small inventory of unique, tagged items. Focus on exact-item tracking, not flow assumptions.
Specific Identification: Exact-Item Tracking
Watch how Specific Identification works step by step. You'll see that this method doesn't assume — it tracks the exact cost of each item sold.
In Lessons 2-3, you learned FIFO and LIFO — methods thatassume costs flow in a certain order. But what if you don't need to assume?
FIFO / LIFO
Assume costs flow in a pattern. You don't know which specific units sold — you apply a rule.
Used when items are identical and can't be individually tracked.
Specific Identification
Track each item's cost exactly. You know which unit sold because it has a serial number, tag, or certificate.
Used when items are unique, expensive, or individually traceable.
Specific Identification is not a "flow assumption." It doesn't ask "which layer sold first?" because you already know — you recorded it when the sale happened.
Watch the demonstration below. You'll see a small inventory of laptops, each with a serial number and recorded cost. When a customer buys one, you'll trackexactly which laptop it was.
Understand the Business
CustomTech Solutions sells custom gaming laptops. Each laptop is unique with its own serial number and tracked cost.
Why Specific Identification?
Unlike FIFO and LIFO, Specific Identification doesn't make assumptions about which items sold. Instead, you track exactly which item went to which customer.
Key Point: Each item in your inventory has a serial number orunique identifier. When Alex buys a laptop, you don't guess which one — you know because you recorded the serial number.
✓ No Averaging
Each laptop had a different cost: $1,450, $1,480, $1,525, $1,510, $1,460. You didn't blend them — you tracked each one.
✓ No Assumptions
You didn't ask "which layer?" You recorded the serial number. When Alex bought, you knew it was GL-2024-001.
✓ Direct Calculation
COGS was simply the sum of the three laptops sold. Subtract from Goods Available, and you get Ending Inventory.
✓ Exact Tracking
The two laptops still on shelf have specific costs. Their combined value is your ending inventory — no estimation needed.
When to use: Cars, jewelry, custom-built computers, real estate, high-value equipment — any inventory where items are unique and individually traceable.
Discussion Prompt (2 minutes):
- If Sarah sold hundreds of identical $2 gift cards instead of custom laptops, would Specific Identification still make sense? Why or why not?
- What would happen to Sarah's COGS if Alex had bought the $1,525 gaming laptop instead of the $1,450 one? How would that change her profit?
- Why is Specific Identification sometimes called the "most accurate" method?
You've watched how Specific Identification works. Now practice it yourself! Work through each step to build your inventory, record sales, calculate COGS, and verify your work.
Tip: Take your time with each step. The "Next" button will unlock once you complete the current task.
Step 1: Predict
Which method fits this business?
CustomTech Solutions sells custom gaming laptops. Each laptop is built to order with different components, has a unique serial number, and costs a different amount.
CustomTech sells unique gaming laptops, each with its own serial number. Which inventory method fits BEST?
You've seen Specific Identification in action. Next, you'll work through Weighted Average together — a completely different approach for when items can't be individually tracked.
Preview: Weighted Average blends all purchase costs together into a single average price. It's perfect for bulk goods, commodities, and similar items — like the grocery supplier from Phase 1.