Joined: 16 Jun 2010
Online Status: Offline Posts: 114
Posted: 01 Oct 2010 at 15:46 | IP Logged
becker pass master FAR 2, #91
On 12/28/90, Kerr MFG Co. purchased goods costing $50,000. the terms were FOB destination. Some of the costs incurred in connection w/ the sale and elivery of the goods were as follows:
Packaging for shipment...................$1,000 Shipping........................................1,500 Special handling charges..................2,000
These goods were received on 12/31/90. In Kerr's 12/31/90 BS, what amt of cost for these goods should be included in inventory?
Answer: $50,000
If shipment is considered FOB destination, that means the buyer will record inventory on their books when actually received. Shouldn't the cost of shipping of bringing the goods in be recorded as part of inventory also?
Joined: 01 Apr 2009 Location: United States
Online Status: Offline Posts: 413
Posted: 01 Oct 2010 at 16:14 | IP Logged
Based on what you've said above I agree that the answer would be $50,000. With FOB destination, the seller is to ship the goods to the destination at the seller's expens. The buyer will include the cost of the goods in inventory upon recipt.
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Topic: FOB destination
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