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Write your response and explain your reasoning.
Northstar owns two separately tracked production units. Records tie S-7 to a $4,800 qualifying cost and S-8 to a $5,100 qualifying cost. The executed sales and shipping records identify S-7 as sold. The controlled ending count identifies S-8 as on hand. Assign each cost and state which evidence supports specific identification.
Northstar also holds interchangeable valves under one product code. The valve pool begins with 50 units at $8. Northstar buys 40 at $10, sells 60, buys 30 at $12, and sells 25. Prepare periodic and perpetual FIFO schedules. Show layers after each perpetual event, reconcile units and cost, and explain what the FIFO result cannot establish about physical movement.
Use ASC 330-10-30-9 for the US-GAAP cost-flow boundary and the official IAS 2 overview for its distinction between identified and interchangeable inventory.
Compare your reasoning with the worked answer
Northstar's continuous records identify S-7 as the unit sold, so assign its $4,800 cost to expense. S-8 remains in inventory at its documented $5,100 cost. The separate valves share a product code and are interchangeable; the label does not support choosing individual valve costs after the sale.
For the valves, 120 units costing $1,160 are available and 85 units sell. At the first sale, perpetual FIFO assigns 50 units at $8 and 10 at $10, or $500. The second sale assigns 25 units at $10, or $250. Total cost of goods sold is $750. Ending inventory is 5 units at $10 and 30 at $12, or $410. Periodic FIFO assigns the same 85 units to the earliest full-period costs and reaches the same amounts. The controls are 35 ending units and $750 plus $410 equal to $1,160.
The FIFO result assigns costs. Shipment and warehouse evidence would be needed to say which physical valves moved.