Consignment inventory

Consignment inventory is stock held by a dealer but still owned by the supplier until it is sold to an end customer, so no sale is recorded and the stock stays on the supplier's balance sheet.

ByHoang TruongUpdated July 11, 2026

FrameworkIFRS 15

See it move

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A supplier ships 200 units to a dealer on consignment, costing €40 each, €8,000 in total. The dealer holds the stock but cannot sell it as its own. During the month 150 units sell to end customers, so the supplier recognises €10,500 of revenue and 150 × €40 = €6,000 of cost of sales. The remaining 50 units, €2,000, stay on the supplier's own balance sheet.

Where it fits

SubjectFinancial AccountingAdvancedTopicInventory & COGSAdvanced

The formula

LaTeX

I_{rem} = (Q_{shipped} - Q_{sold}) \times c

Variables

$I_{r e m}$: Consignment inventory remaining (€)
$Q_{s hi pp e d}$: Units shipped on consignment (units)
$Q_{so l d}$: Units sold to end customers (units)
$c$: Unit cost (€ per unit)

Gives the cost value of consigned stock the supplier still reports as its own inventory at period end.

Check yourself

PracticeCORE

A supplier consigns 500 units at a cost of €25 each to a dealer. By period end the dealer has sold 320 of those units to customers at €45 each and still holds the rest unsold. What amount of consignment inventory does the supplier report on its own balance sheet at period end?

Select an answer to check your understanding.