USA COGS vs expense

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I work for a company where we buy product based on contractual volume. We had an situation where we were unable to take our contracted volume and it was agreed that the company that we would have purchased from cancelled our contract and then sold the cancelled volume on the open market. Any difference between our contracted price and selling price we would pay. I am adamant that this is not COGS but rather OpEx (Contract Cancellation Expense) as we never had legal ownereship of the product and the contract was cancelled. I see no way we can call this COGS. I am getting A LOT of pushback as they want it in COGS where it is not as visible. I am hoping someone has some insight or even a FAS to support either side.

Thank you!
 
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kirby

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Let's say that the ONLY transaction all year was the cancelled contract - i.e no sales at all. Then how odd would it look for that loss to be shown as "COGS" when nothing was sold!
But
if this pits you against the boss or higher ups - be careful .......sometimes being right is not the correct move...
 

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