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Consignment stock

What is the correct accounting treatment for consignment stock if the consignee is the consumer of the goods. Please advise. Thanks


Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Ownership is still with the consignor and still recorded in its books as inventory. Once consumed...considered/recorded sold. Treat like any inventory that is stored elsewhere. If you want to separate it from regular inventory, you can create a separate GL inventory classification. A process should also be in place to trigger recording as "consumed/sold". Needless to say, periodic inventory count is important. Most also forget to provide insurance for the value of the consigned goods.

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Adding to Emerson's advice, look at the entire business process, from the time the order is received to ship product to how the consumption is reported back for prompt billing and how inventory shortages are managed.Does the business process flow the right way into accounting?


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