--- title: "Inventory Accounting for BC Breweries & Dealers | EverStone" url: https://www.everstonecpa.com/blog/inventory-accounting-bc description: "Inventory accounting for tax: lower of cost and market, work in progress for producers, brewery and dealer specifics, and counts the CRA accepts. Read on." type: guide updated: 2026-10-04 summary: "For tax, inventory is generally valued at the lower of cost and fair market value (or the whole inventory at fair market value), using the same method consistently each year. Work-in-progress must reflect materials, labour and overhead invested so far, not just raw materials." faq_count: 7 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Blog](https://www.everstonecpa.com/blog) Inventory Accounting for Breweries, Food Producers and Dealerships Inventory accounting # Inventory accounting *for breweries, food producers and dealerships* By EverStone CPA · Reviewed August 2026 · 7 min read For a Langley brewery, food producer or dealership, inventory is often the biggest balance-sheet number and drives profit directly through cost of goods sold. How you value and count it changes your tax. This guide covers the rules and the common traps. **Quick answer:** For tax, inventory is generally valued at the lower of cost and fair market value (or the whole inventory at fair market value), using the same method consistently each year. Work-in-progress must reflect materials, labour and overhead invested so far, not just raw materials. Breweries and food producers carry raw-material, WIP and packaging inventory and generally need excise registration; dealerships carry financed floor-plan inventory. A documented year-end count is what supports your cost of goods sold if the CRA reviews it. Work-in-progress is more than raw materials. ## Inventory accounting: the valuation basics The [Income Tax Act](https://laws-lois.justice.gc.ca/eng/acts/I-3.3/) generally lets you value inventory at the **lower of cost and fair market value**, or the **entire inventory at fair market value**, applied *consistently*. **Opening inventory** is the prior **closing inventory**. Since cost of goods sold is opening plus purchases minus closing, understating closing inventory overstates expenses, and overstating it taxes unrealized profit. ## Work-in-progress for production businesses Producers usually end the year with product mid-process. That **work-in-progress** is valued at materials, direct labour and a share of production overhead. Raw-material cost alone understates it and shifts profit, so a defensible absorption method is a key decision. **Want these claims documented properly?** Our monthly bookkeeping, from $325 a month, keeps every deduction backed by a receipt and a reconciled account before the CRA asks. See [our bookkeeping](https://www.everstonecpa.com/accounting-services), or [get a bookkeeping quote](https://www.everstonecpa.com/book-online). [Get My Fixed Quote](https://www.everstonecpa.com/book-online) ## Brewery and food-producer specifics Producers hold **raw materials** (grain, hops, ingredients), **work-in-progress**, **finished goods** and **packaging**, all counted and valued. Breweries generally must also be **licensed or registered with the CRA for excise** before producing, separately from income tax. Set up inventory and excise together. ## Dealership floor-plan basics Dealers use **floor-plan financing**. Lot units are *inventory* until sold; floor-plan interest is a financing cost. Tracking what is on the lot, what sold and the financing keeps a dealer’s margin reconciled and reviews painless. ## Count procedures the CRA respects Year-end is the same everywhere: a documented **physical count** with a clear **cutoff**, sheets kept, reconciled and valued consistently. Good [bookkeeping](https://www.everstonecpa.com/accounting-services) and a documented count support cost of goods sold and feed your [year-end financial statements](https://www.everstonecpa.com/financial-statement-preparation-canada). See our [year-end inventory count](https://www.everstonecpa.com/blog/year-end-inventory-count-canada) guide. ## The bottom line Inventory is where producers and dealers gain or lose tax accuracy. Value consistently, capture WIP, manage excise and floor plans, and count carefully. A Langley or Fraser Valley business benefits from an [accountant in Langley](https://www.everstonecpa.com/accountant-langley) who sets inventory up right. Sources - [Canada Revenue Agency — Business income, cost of goods sold and inventory valuation (T4002)](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002/t4002-6.html) - [Canada Revenue Agency — Excise duty technical information (brewers and other licensees)](https://www.canada.ca/en/revenue-agency/services/tax/technical-information/excise-duty.html) This article is general information for Canadian business owners and is current as of July 2026. It is not tax advice, and your situation is unique, so please [speak with a CPA](https://www.everstonecpa.com/book-online) before acting on anything here. About this article **EverStone CPA** Prepared and reviewed by a CPA at EverStone CPA, serving businesses in BC, Alberta, Ontario and Manitoba. [About the firm →](https://www.everstonecpa.com/about) · [Send an enquiry →](https://www.everstonecpa.com/book-online) Inventory-carrying businesses across the valley run into this. We work with owners in [Abbotsford](https://www.everstonecpa.com/accountant-abbotsford), [Chilliwack](https://www.everstonecpa.com/accountant-chilliwack), [Mission](https://www.everstonecpa.com/accountant-mission), [Maple Ridge](https://www.everstonecpa.com/accountant-maple-ridge) and [Surrey](https://www.everstonecpa.com/accountant-surrey). ### Keep reading [Accountant in Langley →](https://www.everstonecpa.com/accountant-langley) [Bookkeeping & accounting services →](https://www.everstonecpa.com/accounting-services) [Year-end financial statements →](https://www.everstonecpa.com/financial-statement-preparation-canada) Common questions ## Frequently asked questions **How do I value inventory for tax in Canada?** Generally at the lower of cost and fair market value, or all at fair market value — consistently each year. Opening inventory is the prior closing figure, and closing inventory drives cost of goods sold and profit. **What is work-in-progress and how is it valued?** WIP is partly finished goods at year-end, valued at materials, direct labour and overhead to date, not just raw material. Omitting it understates inventory and shifts profit. **Do breweries and food producers need to register for excise?** Breweries generally need CRA excise licensing or registration before producing, separate from income tax. They also carry raw materials, WIP and packaging to count at year-end. **How should I handle a year-end inventory count?** Count at or near year-end, document it, apply cutoff, reconcile to the books and value consistently. That is the evidence the CRA looks for if cost of goods sold is reviewed. **Can I change my inventory valuation method?** Not casually. The method must be consistent, since closing becomes opening inventory and a change shifts profit. Discuss and document any warranted change in advance. **Why does closing inventory change my tax bill?** Cost of goods sold is opening inventory plus purchases minus closing. Understate closing inventory and expenses rise; overstate it and you pay tax on unrealized profit. **How is floor-plan financing handled for a dealership?** Lot units are inventory until sold; floor-plan interest is a financing cost, not inventory cost. Reconciling lot, sales and financing keeps margins accurate. ## Inventory-heavy business? We set up inventory, WIP and cost of goods sold so your margin is right and your year-end holds up. Send an enquiry to a CPA. [Get My Fixed Quote](https://www.everstonecpa.com/book-online)[Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) ## Have a question about this? Ask free through [the quick-question form](https://www.everstonecpa.com/quick-question); a CPA replies within one business day. Need more? A 45-minute **Advice Call** is $225 plus GST, credited to your first invoice if you become a client within 60 days. Want us to take it on? [Send an enquiry](https://www.everstonecpa.com/book-online). Where an external engagement is coming, inventory is the first thing tested, and [the count an auditor will accept](https://www.everstonecpa.com/audit-review-readiness) is what that requires. Perishable stock and zero-rated output make food a harder case than most; [inventory in a food processing business](https://www.everstonecpa.com/blog/abbotsford-agri-food-processor-year-end) works through one. A manufacturer carries a third category a reseller never does, work in progress, and [inventory that is manufactured rather than bought](https://www.everstonecpa.com/blog/maple-ridge-manufacturers-inventory-wip-cca) sets out how it is valued. [Ask a Free Question](https://www.everstonecpa.com/quick-question) [Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) Email info@everstonecpa.com ★★★★★ “…have been completing my bookkeeping, taxes and financials for the last 2 years and they have been amazing. Thank you!” R. H. · Google review **Run your own numbers with the free calculators:** [estimate your instalment payments](https://www.everstonecpa.com/tax-instalment-calculator) · [Salary vs dividends calculator](https://www.everstonecpa.com/salary-vs-dividends-calculator) · [when the T2 has to be filed](https://www.everstonecpa.com/t2-deadline-calculator) [← Interest deductibility: what the borrowed money is used for](https://www.everstonecpa.com/blog/interest-deductibility-canada-business) [Investment income inside a corporation: refundable tax, dividend refunds and integration →](https://www.everstonecpa.com/blog/investment-income-in-a-corporation-canada) --- Source: https://www.everstonecpa.com/blog/inventory-accounting-bc Prices: https://www.everstonecpa.com/pricing · Contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online