Incidental costs for acquiring merchandise inventory, such as import duties, freight, storage, and insurance, should not be added to the cost of inventory.

Question

Quizplus · Accepted Answer

Incidental costs for acquiring merchandise inventory, such as import duties, freight, storage, and insurance, should be added to the cost of inventory as they are necessary costs incurred to bring the inventory to the business's location and make it ready for sale. These costs are known as landed costs and are included in the cost of goods sold when the inventory is sold.

Incidental Costs for Acquiring Merchandise Inventory, Such as Import Duties