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CPAINNJ
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Joined: 10 Jul 2009
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Posts: 423

Posted: 14 Jul 2009 at 08:33 \| IP Logged

Uniform capitalization rules and classification of 1231 and capital assets seems like a difficult concept to understand .

When is inventory capitalized and when not

Any tips or help appreciated .

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LeadFoot
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Joined: 09 Oct 2008
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Posted: 14 Jul 2009 at 14:05 \| IP Logged

Inventory is capitalized when it is goods for resale to customers (e.g. clothing, CDs, groceries, etc.). Inventory is expensed when it is business supplies normally consumed within the year (e.g. paper clips, pencils, toner cartridges, etc.).

There are exceptions but as far as inventory is concerned, those are the general rules.

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