Consigned Subinventory definition - Asset or Expense

Summary:

Hi All,

Our customer is using Supplier Consigned process (OOTB process). To segregate the consigned stock, we have defined a Consigned Subinventory and it can be defined either as Expense or Asset subinventory. 

From accounting perspective and internal tests, our finance team seems to think that in case the Consigned Subinventory is defined as Expense, it will hit the expense (or P/L accounts) and in case its defined as Asset, it will hit the valuation (or Balance Sheet accounts).

However, we are looking at the best practice to determine this, any pointers would be appreciated. Have also asked this in the Costing forum