@Harshm135 

Freight charges should be part of COGS regardless if they are expensed immediately or capitalized into inventory and expensed to COGS when sold.  The only significant difference would be if your inventory increased or decreased significantly in a fiscal year.  If your inventory increased (and presumably your freight costs) and you expensed freight to COGS immediately, COGS would be higher and GM lower compared to capitalizing freight costs.  If your inventory decreased and you expensed freight to COGS immediately, COGS would be lower and GM higher compared to capitalizing freight costs.  If you're preparing your financial statements in accordance with GAAP, then you should capitalize freight costs. If you're preparing your financial statements on tax basis then you have the choice to capitalize freight costs or expense to COGS immediately.