Accounting Question

Sethro

I buy a vending box hoping to find cards worthy enough to submit.

The box costs $500 including shipping, which works out to $1.00 per card.

I find only one card worth submitting.

The costs for submitting, insurance, and postage both ways costs $9.00.

How much did I pay for this slabbed card? Did I pay $10.00 or $509.00?

One the one hand I paid $1.00 for the card I submitted, so it seems like I only paid $10.00 for the slabbed card. However, on the other hand I actually spent $509.00 to end up with just one slabbed card.

Is there an accountant type answer for this? Thank you in advance.

Beck6

In reality you have $509 into the card, but from the IRS point of view it seems you would have a hard time getting them to agree. You still have 499 cards of inventory.

hhmag70

What happened to the other 499 cards? They still hold value and would change your numbers.

mrmint23

I doubt the company would sale you the vending box on an individual card basis....so I would say your basis in the investment is the cost of the vending box.

Sethro

The 499 other cards still exist. They would probably be in a box somewhere. Maybe some of the nicer ones would go into a raw set.

However, obtaining cards was not the goal. Obtaining slabbed cards was the goal.

When I receive the card back from PSA and go to enter the "Your Price" section of the database, I am curious as to what price I should enter.

$509 or $10.

Of course, I want the answer to be $10, but I have a feeling it is $509.

jeffcbay

If you're entering this information into your accounting spreadsheet, really it should be $10 since you still have the rest in inventory.

mtcards

It really depends on how you look at it.

From an IRS standpoint, you spent $500.00 on inventory and $9 on "service" making your total deductions against your sales as $509. You still have "inventory" and once you sell those, you will increase your sales, but your deduction will not increase. Eventually, and hopefully, you will eventually gain a positive number through other sales. From an ebay tax standpoint though, I have no idea how they are going to start doing those things once the IRS gets involved

CollectorAtWork

I think you might have some more flexibility on how you want to value that one slabbed card. For example, if I buy a lot of cards, that lot may contain some HOFers, stars and commons. I would then typically value the HOFers at a higher price than the others when I break the lot and sell the cards individually. You would basically be giving each card a rough fair market value. In your case, if that one card that you slabbed ended up being a PSA 10 Pete Rose rookie, you can give that card a value of $499 and the rest of the cards a value of $1.

jivan

try to find one more card to submit.....then it will be work out better for you

cpamike

Do you really want an Accountant to comment on this? This could take awhile.

Seriously though, I would say $10 is your cost, $1 allocated to the card and $9 for slabbing it. As was already said, the other cards are still in your possession as inventory and need a value associated with them. If you were to trash the cards like barf did, then you could make the argument that the card's cost is $509. That's my 2 cents worth, just don't spend it in one place.

lahmejoon

It depends on your method of accounting, but you would certainly have to allocate part of the purchase price to the other 499 cards. As long as you can establish that your allocation is reasonable and as long as you are consistent in your application, you would not have any issues. You certainly would not be able to justify allocating $1 for the remaining 499 cards, unless we're talking about 1988 Topps...

SportsCardMan

The cost of that card is $10. The cost of the other cards are $1 each.

You are sometimes allowed to reallocate the cost of a lot, but you must have evidence to support what you did and how you did it.

You cannot make the 499 cards cost 0 and 1 card cost $509, then sell the 1 card for $20 and then take a $489 loss.

Dboneesq

<< <i>It depends on your method of accounting, but you would certainly have to allocate part of the purchase price to the other 499 cards. As long as you can establish that your allocation is reasonable and as long as you are consistent in your application, you would not have any issues. You certainly would not be able to justify allocating $1 for the remaining 499 cards, unless we're talking about 1988 Topps... >>



I agree with Mike on this. So long as you can justify why you allocated the way you did and it is reasonable, you should not have any problems.

JMDVM

I would use the VCP average or SMR to determine the cost basis for your graded card. Subtract that from $509 and use the difference as your cost basis for the other 499 cards.

thenavarro

Way too many variables to give you one answer, and not knowing what your final intent is IE, for IRS tax reasons, for your internal accounting, for future pricing, for cost accounting purposes, etc.

Are you going to allocate any of your fixed or variable costs to your costs of goods ? Your labor, your storage, your mileage to/from shipping facility, etc. You can probably create a reasonable argument depending on what you want the end result to be in valuing that one card from anywhere from nothing, up to thousands depending on your overhead and your allocation of those costs.

Although I am a CPA, the above is not to be intended as giving you "accounting advice", just throwing out some thoughts for arguments sake.

Mike

cpamike

<< <i>Although I am a CPA, the above is not to be intended as giving you "accounting advice", just throwing out some thoughts for arguments sake.

Mike >>



Nice disclaimer, Mike.

I gave a very simplistic answer, but as Mike has demonstrated that there are a lot of variables to consider which can change the answer significantly.

mcadams

This is terrible. Can we also start a thread about going to the dentist.

stevek

Based on this thread, my conclusion is that CPA card collectors are usually named Mike.

gameusedhoop

<< <i>Based on this thread, my conclusion is that CPA card collectors are usually named Mike >>



Yes, but the burning question is "what is the name of their dentists?" That is what we all need to know!

cpamike

<< <i>

<< <i>Based on this thread, my conclusion is that CPA card collectors are usually named Mike >>



Yes, but the burning question is "what is the name of their dentists?" That is what we all need to know! >>



Mine is named Mitchell. Always glad to help with the burning questions of the day.

thenavarro

<< <i>

<< <i>

<< <i>Based on this thread, my conclusion is that CPA card collectors are usually named Mike >>



Yes, but the burning question is "what is the name of their dentists?" That is what we all need to know! >>



Mine is named Mitchell. Always glad to help with the burning questions of the day. >>



And mine is named Mackey

Mike

tennesseebanker

Count the card cost @ $1 and write the $499 as Goodwill.