Chapter 8 - Valuation of Inventories: A Cost-Basis Approach - Review and Practice - Questions - Page 421: 11

Arguments for: The application of specific identification results in the matching of costs and revenue. Consequently, the actual cost associated with ending inventory is reported under specific identification. Besides, under specific identification, the goods flowing physically are matched against the flow of costs. Arguments against: Manipulation of net income could occur when specific identification is applied. Besides, specification allocation can result in the subjective distribution of costs associated with particular items within inventory.

Arguments for: The application of specific identification results in the matching of costs and revenue. Consequently, the actual cost associated with ending inventory is reported under specific identification. Besides, under specific identification, the goods flowing physically are matched against the flow of costs. Arguments against: Manipulation of net income could occur when specific identification is applied. Besides, specification allocation can result in the subjective distribution of costs associated with particular items within inventory.