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Level 1

Accounting question

A friend of mine has a  small used car business where he buys used cars, fixes them up, and resells them. Do the car parts he buys go into cost of goods sold or are they expensed? If they go into cost of goods sold, must he keep track of every part that goes into the car and increase the cost basis of the car by that amount?

1 Comment
Level 15

Accounting question

All costs to repair and make ready to sell an item are part of the items cost.

The items cost only becomes COGS when the item is sold

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