Landed costs provide the ability to increase the asset value of inventory by including additional expenses associated with procuring stock but also any charges associated with getting items into the warehouse and available for sale. These additional expenses contribute to the total cost of goods sold and affect inventory valuation.
Expenses that contribute to landed costs can include the following:
- Shipping charges
- Freight fees
- Origin and destination charges
- Import fees
- Duty fees (excise and customs)
- Handling charges
Any landed cost associated with an item is added to the actual asset value of an inventory item.