Hi frenchery,
I know someone who’s a whiz with our software, Mike_James, he might have some great alternative methods to share here.
Cheers,
Princess
Hi Mike_James
I would love to hear your thoguhts on that matter.
Essentially I am looking at alternative ways to record import costs other than creating stock iems for each import costs category which in my opinion is a workable solution but not ideal. I would rather keep my product items for actual products.
I suggested above the idea of using different chart of accounts. Would it be a good idea ? what would be your recommendations on the steps to follow ?
Thanks in advance.
Hi frenchery , a disclaimer first, I am based in NZ, which affects my interpretation of tax practices. And most of the accounts lists that I see in MYOB files do not have opening/closing stock accounts in the P&L, as all inventory costs are added to asset accounts initially and transferred to cost of sales accounts when sales take place. And I'm going to ignore foreign currencies for the moment.
I always recommend that import costs (aka landed costs) are included as part of the inventory cost of the items being imported, so that your inventory value reflects the cost of bringing it to its current state. I don't include customs GST in these costs as it is recoverable. However, my approach is slightly different to the article you quoted.
My clients will usually prepare a manual landed cost calculation which takes the supplier costs, and allocates all the import costs (except customs GST) across the shipment on some reasonable basis, eg line value. Some import costs may need to be estimated.
To record the supplier's bill (as an item purchase), the line items are included at the full cost per the manual costing, and then a line is added to deduct the import costs that have been included. (An item is created as "I buy...", allocated to an account in the cost of sales section). So the final line reads -1 Import costs @ $400 = -$400, no GST, and the net amount of the bill is what you owe the supplier.
When the various import costs come in, they are recorded as service bills, allocated either to the same COGS account as the negative amount above, or to separate COGS accounts, as you prefer. The credit above offsets these costs, any difference on the shipment overall is due to the use of estimates in the costing.
If the supplier is billing you in their currency, and you have multiple currencies enabled, then the manual costing will have to be done in their currency, with local import costs converted to that currency accordingly.
