Carriage Inward

by Laxmann Nalamadi Istari
(Mumbai)

Q: Carriage inward comes under which category?

A:
Well, first let's make sure we understand what "carriage" is - carriage simply means transport costs.

So carriage inwards would be transport costs for purchasing an asset.

One key rule when valuing an asset is that the cost of an asset includes all costs necessary to get the asset to your business and into a condition in which it can be sold.

So if you had the following expenditures:
- Purchase price of manufacturing machine $40,000
- Shipping transport costs $500
- Import taxes and duties $2,000
- Transport costs by rail $200
- Installation costs $1,000

Then the total cost of the manufacturing machine would be $43,700 (all the costs above added together).

So "carriage in" or "freight in" or "transport costs in" (or whatever similar term they use) is a part of the cost of an asset.

The only exception to this that I'm aware of is when you purchase inventory and you use the periodic system of inventory accounting. Then the transport cost is recorded as a separate expense account.

Comments for Carriage Inward

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very nice..
by: Anonymous

thank you for giving this useful information..

thank you
by: Anonymous

thank you so much

EXPLANATION
by: bharat

very well explained

doubt
by: Anonymous

so carriage duty means the same?

THANKS
by: muhammad rafaqat

Thanks a lot to give us important information

nicely explained
by:

Nicely explained

.
by: Tausif Mohammad

Helped A lot ,
Thank you :)

Shipping inwards
by: Anonymous

Thanks for explanation!

hey
by: Anonymous

thanks for ur help.

Carriage Info
by: ravi

Info given is nice, plz visit the site those who don't know about accounting!

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