No expert here, but it seems logical to use the inventory value you
recordedusing the cost of materials. Your accountant (hopefully you
have one) should be a resource. My accountant told me to keep records
of the materials used and the amount received at sale of a piece. The
difference is profit, upon which your income tax is calculated.
Somehow expenses, depreciation, etc. are deducted to come up with
your final payment to IRS - I leave all that number-crunching to the
accountant! (I’m considering that you live in the USA)
When I use scrap in a piece, the materials’ value has already been
’charged’to the original piece that produced the scrap and is
reflected in its inventory record of value. That means the scrap
piece has a lower value in the inventory record, because you can’t
count the same thing twice. For example, a pair of earrings made
from the cut-outs left over from something else - the inventory
value is the cost of posts and earring backs because the cut-outs
value has already been accounted for in the original piece.
Your refurbished piece’s value begins with the purchase price of the
scrap, plus the cost of any new material. Labor, overhead and profit
would make up the rest of the price you assign to the piece.
Lean on your accountant for advice, as every state and country has
differentrequirements. My condolences on the divorce. The process is
never easy. for anyone.
Judy in Kansas, where summer keeps on happening, but cooler weather
and rainshould bring relief soon.