Should FOB Destination be included in inventory?

Should FOB Destination be included in inventory?

The FOB destination outlines terms indicating that the seller will incur the delivery expense to get the goods to the destination. This means that goods in transit should be reported as inventory by the seller since technically the sale doesn’t occur until the goods reach the destination.

Is FOB shipping point included in ending inventory?

Answer No. The seller will not include in the year end inventory. FOB shipping point means “free on board shipping point”, that is the…

Is FOB shipping point an expense?

FOB Destination means the seller is responsible for the merchandise, and the cost of shipping is expensed immediately in the period as a delivery expense.

How do you record FOB shipping point and FOB destination?

In FOB Shipping Point, both seller and buyer record the delivery once the shipment leaves the seller’s warehouse (or shipping dock). In FOB Destination, the seller and buyer record the sale (and purchase) only after the shipment reaches the buyer’s dock. Another difference is in the division of costs.

Who pays the FOB shipping point?

When it comes to the FOB shipping point option, the seller assumes the transport costs and fees until the goods reach the port of origin. Once the goods are on the ship, the buyer is financially responsible for all costs associated with transport as well as customs, taxes, and other fees.

What happens when merchandise is delivered FOB shipping point?

FOB is a shipping term that stands for “free on board.” If a shipment is designated FOB (the seller’s location), then as soon as the shipment of goods leaves the seller’s warehouse, the seller records the sale as complete. The buyer owns the products en route to its warehouse and must pay any delivery charges.