Accounting for dummies, help me categorize my expenses

Lessor Accounting - ASC 842. It depends on the type of Lease.

Generally not inventory.

COGS - Rental Equipment will be for expenses while renting the equipment (maintenance, delivery, etc.)

When you purchase equipment or items with the intention of renting them out, they are typically classified as fixed assets rather than inventory. Fixed assets are long-term assets that are used in the operations of a business and are not intended for sale. They are expected to provide economic benefit to the business over a period of time, usually exceeding one year.

On the other hand, inventory refers to goods that a business holds for sale or for use in the production process. Inventory is generally expected to be sold within a year or less.

Regarding the cost of goods sold (COGS), it is an expense category that represents the direct costs associated with producing or acquiring the goods sold by a company. In the case of rental equipment, the cost of the equipment itself would typically be classified as a fixed asset and not included in the COGS. However, any costs directly related to the rental process, such as maintenance, repairs, or depreciation, could be considered as part of the expenses associated with generating rental income.

It's worth noting that specific accounting practices may vary depending on the jurisdiction and the nature of your business. It's always advisable to consult with a professional accountant or financial advisor to ensure accurate classification and treatment of your assets and expenses.