13. FIFO, average-cost, and LIFO methods are often used instead of specific identification for inventory valuation purposes. Compare these methods with the specific identification method, discussing the theoretical propriety of each method in the determination of income and asset valuation. a. The FIFO method estimates the specific identification method when the physical flow of goods is on a FIFO basis. In comparison to the specific identification method, an attractive aspect of FIFO is the elimination of the danger of artificial determination of income by the selection of advantageously priced items to be sold. The FIFO method maximizes the effects of price fluctuations upon reported income because current revenue is matched with the oldest costs which are probably least similar to current costs. However, FIFO produces a balance sheet value close to current replacement costs.