Specific identification
In one sentenceAn inventory costing method that tracks the cost of each individual unit, so cost of sales is charged at the actual cost of the very unit sold.
Simply put
It suits high-value items that are not alike, where each unit can be told apart, such as cars by chassis number, jewelry or real estate.
IAS 2 requires it for items that are not interchangeable or that are set aside for a specific project, and it does not suit large numbers of similar items.
Worked example
A car showroom bought a particular car for 85,000 SAR and sold it for 95,000 SAR before VAT.
Selling price95,000 SAR
Cost of that car85,000 SAR
Gross profit on this car95,000 − 85,000 = 10,000 SAR
Don't confuse it with
Weighted average costThe average mixes the costs of similar units, while specific identification tracks each unit at its own cost.