Booking of product certifications
Hello,
the following situation: We are a company required to prepare financial statements and import electronic items from China. We are the importer and therefore also the manufacturer of the product.
For some of these items, we need a special certification so that they can be used in vehicles. This is called an E-marking. The supplier in China can provide us with this certification, but charges a one-time fee of 4000 euros per successful certification. We regularly order these items, but only in small quantities (50-100 pieces). Price per item is approximately 30-60 euros.
Now my question is, how should the costs for these certifications be recorded? Are they considered operating expenses or should these costs be recorded under the account of cost of goods sold or cost of goods purchased?
If recorded under the account of cost of goods sold or cost of goods purchased, how would the value of the goods be calculated during inventory? For example, if I have 10 of these items worth 300 euros in inventory as of the inventory date, would the full amount for the certification (4000 euros) be added, making these 10 items worth 4300 euros? How should this be accurately represented, and what are the possible options?
Thank you.
Kind regards,