Restaurant Tariff Accounting: ASC 330 & ASC 360 | GBQ
In today’s global economy, tariffs on imported goods are an increasingly relevant cost consideration for restaurants. From specialty food imports to commercial kitchen equipment and construction materials, tariffs can materially affect a restaurant’s financial performance and long-term capital planning. For finance and accounting professionals, understanding the proper accounting treatment of these costs and their implications for strategic decisions and asset impairment is essential.

Tariffs & Inventory Accounting

Under ASC 330 – Inventory, tariffs are treated as part of the cost to acquire inventory. This includes food, beverages, and supplies that are imported and necessary for operations. Per GAAP, inventory costs must include all expenditures directly attributable to bringing an item to its current location and condition, such as:
  • Purchase price
  • Freight-in
  • Import duties and tariffs
  • Handling and storage fees
For example, if a restaurant imports $10,000 of wine from France and incurs a 25% tariff, the entire $12,500 is recorded as inventory. This amount is later expensed through cost of goods sold (COGS), not as a separate tariff line item.

Tariffs & Capital Asset Accounting

Under ASC 360 – Property, Plant, and Equipment, tariffs incurred on imported materials or equipment used in construction or remodeling are also capitalized. Costs that make the asset ready for use, such as equipment, tile, lighting, or stainless steel fabricated overseas, are included in the total asset value on the balance sheet.

If an imported oven costs $30,000 and the tariff is $6,000, the full $36,000 is capitalized and depreciated over the asset’s useful life. This applies to both new builds and remodels.

Tariffs & Impairment of Long-Lived Assets

The increase in capitalized costs due to tariffs can also affect impairment evaluations under ASC 360-10-35. GAAP requires that long-lived assets be tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.

Tariffs may trigger or contribute to such indicators, particularly when:

  • Higher capitalized costs reduce expected returns on new locations.
  • Increased expenses strain cash flows or push margins below expectations.
  • Market conditions worsen due to the combined effect of tariffs and inflation.
The asset’s carrying value (including tariffs) is compared to the undiscounted future cash flows during an impairment evaluation. If the carrying amount exceeds those cash flows, an impairment loss is recognized, reducing the asset to its fair value. In other words, tariff-inflated asset costs increase the likelihood of triggering and recognizing impairments if performance deteriorates.

Strategic Management Considerations

Tariff-related accounting directly informs broader business decisions, particularly:

Pricing Strategy

Increased costs in COGS may justify menu price adjustments. Finance teams should assess whether price elasticity allows for recovery of tariff-related expenses without compromising customer volume.

Capital Planning: Build vs. Remodel

When deciding between opening a new restaurant or remodeling an existing one, the tariff impact on imported materials and equipment should be included in capital expenditure forecasts. Remodels may provide opportunities to limit exposure to high-tariff imports, especially if existing infrastructure can be reused.

Vendor and Supply Chain Strategy

From an operational finance perspective, management may seek to diversify suppliers or localize sourcing to avoid tariff exposure. These decisions must be modeled against cost, quality, and operational efficiency.

Conclusion

Tariffs have become a strategic accounting concern for restaurants, influencing both the income statement and balance sheet. Under GAAP, they must be capitalized into inventory and asset costs, as defined in ASC 330 and ASC 360. Tariffs also raise the risk of asset impairments, particularly when they elevate capitalized values without a corresponding increase in returns. Finance and accounting teams must integrate tariff effects into pricing models, investment evaluations, and long-term financial reporting to maintain resilience and compliance.

If you report under the income tax basis of accounting, the treatment of tariffs is the same and will be a deductible expense. If you have any questions, please reach out to your GBQ restaurant services team. 

If you would like to read more about tariffs in the restaurant industry, check out this article, " Tariffs ... No Tariffs: What's A Restaurant Business To Do?" from Fast Casual.

Looking for more insight for restaurant professionals? Check out these resources:

Navigating Tax & Regulatory Changes: Restaurant Industry Leaders' Insight On Government Affairs

IRS Simplifies ERC Compliance: New Guidance Eases Tax Reporting For Restaurants 

Mastering Business Combinations: Key Tips For Franchisor Success