Cost of Goods For Resale
Cost of goods purchased for resale includes purchase price as well as all other costs of acquisitions. This cost should reflect any discounts. Additional costs may include freight paid to acquire the goods, customs duties, sales or use taxes not recoverable paid on materials used, and fees paid for acquisition. For financial reporting purposes such period costs as purchasing department, warehouse, and other operating expenses are usually not treated as part of inventory or cost of goods sold. For U.S. income tax purposes, some of these period costs must be capitalized as part of inventory. Costs of selling, packing, and shipping goods to customers are treated as operating expenses related to the sale. Both International and U.S. accounting standards require that certain abnormal costs, such as those associated with idle capacity, must be treated as expenses rather than part of inventory.
Value added tax is generally not treated as part of cost of goods sold if it may be used as an input credit or otherwise recoverable from the taxing authority.
Read more about this topic: Cost Of Goods Sold
Famous quotes containing the words cost of, cost and/or goods:
“History is strewn with the wrecks of nations which have gained a little progressiveness at the cost of a great deal of hard manliness, and have thus prepared themselves for destruction as soon as the the movements of the world gave a chance for it.”
—Walter Bagehot (18261877)
“The President has paid dear for his White House. It has commonly cost him all his peace, and the best of his manly attributes. To preserve for a short time so conspicuous an appearance before the world, he is content to eat dust before the real masters who stand erect behind the throne.”
—Ralph Waldo Emerson (18031882)
“Note, besides, that it is no more immoral to directly rob citizens than to slip indirect taxes into the price of goods that they cannot do without.”
—Albert Camus (19131960)