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How to recognise internal transportation cost (between own warehouses)?


As aditional pruchase cost and increase the value of inventory or as cost in the period it was expenced

Capitalise-versus-Expense Decision

asked Aug 6, 2016 in IAS 1 - Presentation of Financial Statements by anonymous
What is the purpose of this transportation? Is it purchasing centrally and later distributing to the relevant warehouse?
Yes, there is production in south of the country and than the goods are transported to the north of the country, from where the distribution to the external client takes place.

3 Answers

+1 vote
If the transportation cost is mandatory to complete the production of inventory, or if the inventory is ready for sale but no market is available in area accordingly it is transported to market to be ready for sale then it is part of cost

If transported due to shortage of inventory in other warehouse then it is expense
answered Aug 17, 2016 by anonymous
+1 vote
The cost shall be added to the cost of inventory in case it was internal costs, while in case it was external it should be in the selling and marketing expenses
answered Aug 18, 2016 by Fzakaria Level 2 Member (4,040 points)
0 votes
We can capitalize such expenses only with regard to a fixed asset. There is no such thing as capitalizing something to non-capital asset such as inventory. I think you should take it as a production overhead expense.
answered Aug 8, 2016 by Peterz Level 2 Member (4,560 points)


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