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How do you account for using inventory to build your own asset?

We are a manufacturing company that uses our own product during the construction of our assets. In QuickBooks, how do you account for the use of our product for an asset?

Answers

Anonymous
(Independent Consultant) |

Debit: Mfg Asset
Credit: Inventory (FGI, or WIP or Raw - whatever stage your "product" is in when you convert it for a manufacturing use rather than just being held for sale or being converted to FGI.

Then start depreciating your fixed asset over its estimate useful life.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Another way, depending on your definition of "construction" is by using the Kitting or option feature. This way, when you sell the final item, all the individual items are relived from inventory, CGS is correct and you have the right sales price.

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