DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Warehousing fees


#1

I use a third party warehouse to store my goods till despatching to the customer. Can I capitalise on this cost to get profit?


#2

This is not an accounting question, but one about financial policy. Generally, purchases are capitalized when they involve acquisition of durable items expected to have extended lifespans. The cost is then recovered by depreciation over some defined period, often set by law based upon the type of equipment or building you are buying.

You don’t own the warehouse, so you can’t capitalize it. However, your warehousing costs are a business expense that reduces your profit. As to whether you can recover this cost somehow, that’s a pricing question. If you believe your customers will pay a warehousing charge, you can certainly invoice them for it.


#3

Thanks @Tut then the same would apply for import duty as well right? Please excuse my ignorance I am new to this. Where would I therefore enter import charges/fees?


#4

If you are storing your own manufactured goods, the storage cost can be capitalized to the inventory but storage costs for finished goods purchased from your supplier should be classified as an expense.


#5

Thanks @tony how about import fees/ charges that are charged by customs?


#6

Import fees can be capitalized to the cost of purchasing goods under International Accounting Standard 2 - Inventory.


#7

Ok @tony so what you are saying is that I can capitalise it. How would you capitalise it on manager? Using journal entry?


#8

See the guides - http://www.manager.io/guides/inventory/capitalising-inventory-costs/


#9

Thanks @tony