more-arw search

Q&A Forum

Shipping Costs in CoGS.

Reviewing accounting treatment of shipping costs. My initial thinking is that: a) all shipping from vendors to our warehouse go in CoGs b) shipments to customers should have a separate line and ok to have in opex c) shipment returns from customers should have a separate line ok to have in opex The company I'm reviewing previously included all in one line, was below GP. Can you offer thoughts on how currently done at your business or past life please?

Answers

Anonymous
(Independent Consultant) |

Normal shipping costs incurred from your vendor should be capitalized and reflected in the inventory value (will go through COGS in the period that item is sold). Shipment costs to move inventory from one location to another within your distribution system is generally expensed as it doesn't add any value to the inventory asset. Costs for shipments to customers should be recognized as shipping expense (see previous discussion in this forum on how to account for associated shipping revenue if it is specifically identified in your contract with the customer).

2868 views
Topics

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.