If company A buys from company B a large lot of products (some new and some used) for $X, and the invoice does not break down value of individual items in the lot, is company A allowed to assign values as it likes to those individual line items?
Assume three different cases in answering this:
1) Items are expensed and used in operations immediately2) Items are capitalized
3) Items are purchase for resale (inventory)nish
Yes. It may have to justify the values if it's challenged.
All of them? Then it doesn't matter, does it?
If they're in different depreciation categories, it matters.
If they're all sold, it ends up not mattering (depending on when they're sold, it might matter on a time unit basis).
Seth
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