Transportation-in definition
/What is Transportation-In?
Transportation-in is the freight cost incurred by the buyer to have purchased goods delivered. This cost classification can include freight insurance costs and customs duties. Transportation-in can be assigned to the cost of inventory, which means that it will not be charged to expense until the related inventory is sold to a third party.
Transportation-in can also be included in the capitalized cost of a fixed asset. If so, you should depreciate it over the same useful life as the asset with which it is associated.
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Example of Transportation-In
A company, Coconut Electronics, purchases 1,000 units of computer components from a supplier. The cost of the components is $50 per unit, and the supplier charges $1,000 for shipping (transportation-in). Coconut pays for the shipping. The accounting for this transportation-in charge is to add the $1,000 to the cost of the inventory, resulting in a total inventory cost of $51,000. When the inventory is eventually sold, the transportation-in cost becomes part of the cost of goods sold.