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To: Road Walker who wrote (19478)	3/6/2001 10:39:43 PM
From: Zeev Hed	Respond to of 60323

John, it is very simple, but if you did not charge yourself (on the income statement) for creating the inventory, you cannot credit that inventory to your assets on the balance sheet. You'll end up with inventory that has no cost. That is why inventory typically consists of three calsses, Materials (which you have not added any value added to and is not in your COGS), work in process (which is laready charged to your income statement because you had people handling and partially treating the incoming materials) and finished goods, which already bear the full load of you operations. Only the first of these three elements is not in the COGS. Zeev