What is the best way to account for old inventory items which were purchased multiple years before reselling them?

[justin14]

A few years ago I began purchasing a number of products with the idea that I would eventually end up reselling them for a profit. At the time of purchase, I was not necessarily treating these as business transactions since I did not have an immediate plan to sell said products.

As far as I understand, purchases like these would normally be accounted for in part 4 of the T2125 on line 23: "Purchases during the year", but that doesn't really seem to work in my situation because the purchases were not made this year and were not accounted for as "inventory" in previous years.

Given that these items were bought a number of years ago, is there a different place where I can account for these costs of goods sold if I did not have an opening inventory reported from the previous year?

[TurboTaxJeffrey · Accepted solution]

If you are only reporting items which were sold in the tax year, then record their original cost as "Purchases."  This will reflect the true Cost of Goods Sold.  

If you had been carrying and reporting an inventory each year, then the inventory would have built up...the calculation of Cost of Goods Sold is the value of the Opening Inventory, plus any purchases made in the year, subtracting the value of the Inventory at the end of the year.