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of, inter alia, cores (unprocessed cores raw material inventory)
and new parts (unprocessed new parts raw material inventory) upon
which it drew throughout the remanufacturing process.
During Consolidated's remanufacturing process, Consolidated
incurred expenditures for labor and overhead and transformed
those raw materials into its finished goods or products (viz,
remanufactured automobile parts). During that process for
certain automobile parts, new parts were physically affixed to
and incorporated into a core in order to produce a remanufactured
automobile part. The new parts used by Consolidated in the
remanufacturing process included pistons and rings, rockers and
lifters, springs, bearings, chains, gears, plugs, pins, and other
miscellaneous assembly parts. Consolidated purchased the new
parts that it used in its remanufacturing business from the
manufacturers of such parts.
Consolidated generally obtained cores from two sources.
Consistent with customary and established practice in the
automobile parts remanufacturing industry, Consolidated acquired
most of its cores from its customers (customer cores), whose
source for those cores was their respective customers.
Consolidated also acquired cores, except small part cores,
from persons engaged in the business of selling cores and known
in the automobile parts remanufacturing industry as core
suppliers or core brokers (core suppliers). (We shall refer to
the cores obtained from core suppliers as core supplier cores.)
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Last modified: May 25, 2011