![]() Get the CPA/controller involved!Īs a general guideline, count the inventory and put it on the balance sheet at your cost. But I’m not familiar with the particulars of your case and I’m not a CPA/controller. I’ve run into this before, and it’s not uncommon. I’m answering this question based on assumptions. So, what should we do about it? First, the owner should meet with their CPA to review the issue. In this scenario, depreciation does not apply as we never recognized the asset. The IRS views that as income and, in an audit, they’ll happily charge taxes, penalties and interest. We probably recognized the expense when we bought the part, but we didn’t adjust our inventory to reflect the added parts. The issue is an understatement of income. That was an expensive lesson! Penalties and interest exceeded the tax liability. Personally, I was educated on this topic by an IRS auditor a few years ago. This understatement of inventory also has significant tax implications. It also reflects poorly on business valuation, resulting in a reduction of owner’s equity in both cash flow and asset valuation appraisals of the company. The result is an understatement of current assets, which can affect the financial condition of the business and increase the cost to borrow money. ![]() I assume that the parts have never been inventoried and are not shown on the balance sheet as inventory. The first impact is an understatement of parts gross profit on the profit and loss statement. The result of this sloppy recordkeeping is much more significant than just the clutter of a $10,000 pile of parts. We’ll estimate the value of the parts at $10,000, which is not an uncommon scenario. We paid for the parts on account or by check when they were received and absorbed them into our direct cost of parts. Let’s assume that, over a period of years, we’ve accumulated an inventory of parts that we did not return for a variety of reasons. I have several follow-up questions: How are these parts shown on the financial statements? How many parts are there, and what was their cost? Can any be returned? This question seems simple at first glance, but the answer is far from that. Asked by: Loretta Tanzo, body shop secretary $2500Tractor, truck, hay, tires, John Deere, Kubota, New Holland, Massy Ferguson, Dodge. It’s a little dusty from being in storage. Matco Rat Fink Edition Tool Box - $2,500 (Rocky Mount). ![]() EX CONDITION WITH SIDE TRAY & MATCO COVER. matco RAT FINK tool box - $450 (AMARILLO).75 hp die grinders everything in box is included looking to get $2800 obo. Matco limited edition rat fink tool cart with silver eagle socket ratchet and wrenches sunex wrenches Matco. Matco limited edition rat fink tool cart and tools - $2800 (Oshkosh).If you have a social shop then this is a must have to impress friends and customers! Open to trades, off-road vehicles, atv, golf carts, old trucks, or 15 blue faced bills!. Proformance 11 draw professional toolbox. Matco Limited Rat Fink Rollaway Toolbox - $1500.I can’t stand this just sitting in my garage at home anymore as the shop I work at now has built in tool boxes. The box has only been used as a mechanics tool box for 4 of the last 10 years. ![]() This is a Matco 5s tool box with a custom side locker and top hutch with 1” metal peg board for walls.
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