In order to defer deductions for manufacturing costs until the finished products are sold, Congress enacted rules specifying that the cost of raw materials, shipping costs, and any other indirect costs of manufacturing must be added to the cost of inventory. What are these rules called?

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Business

Dario Booker

14 March, 04:25

In order to defer deductions for manufacturing costs until the finished products are sold, Congress enacted rules specifying that the cost of raw materials, shipping costs, and any other indirect costs of manufacturing must be added to the cost of inventory. What are these rules called?

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Quinn Chen · Answer 1

Uniform cost capitalization rules

Explanation:

Uniform capitalization rules of the Internal Revenue Code Section 263A specifies certain cost of labor, material, other direct and indirect cost to be capitalized and reported as inventory cost. Under this rule, all cost incurred in producing an asset, whether direct cost or indirect cost must be capitalized. The rule is to address the differences in assessment between those that manufacture their assets and those that buy outright.