Explanation
All expenses incurred on the stock till it is placed ready for sale would form direct expenses and will be included in the value of such stock.
1. All expenses incurred by the consignor are direct expenses as they are incurred before the goods reach to the consignee.
2. Expenses incurred by the consignee in relation to consigned stock, before it reaches godown, like cost of transportation, octroi duties, insurance in transit, unloading charges etc., are direct expenses and included in the value of the stock.
3. Any other expenditure by consignee would be indirect expenditure, for example, insurance charges paid after the goods have reached godown.
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