Okay, so he is the owner that puts the items for sale on consignment = those items are still his inventory asset. If they don't sell, he gets them returned to him, for instance. While that is on hand, it is his inventory, even if not in his possession, similar to placing goods for sale for fulfillment through Amazon.

Perspective matters with consigned goods, and sometimes there is some of both "this is for sale and I keep a commission" and "this is for sale and then I pay you for them later." It depends on the terms with the end seller.

Purchases in that year are not COGs, but the expenditure to refill what gets sold.

Inventory cost on hand at beginning of the year

Purchases of same + Any other costs this year that got invested in products

minus

Inventory cost on hand at the end of the year

=

COGS

Example:

0 on hand Year one

$5000 purchased

$2000 left at end of year

= $3000 COGS year one

$6000 purchased in the new year two

$500 left at end of year two

=

$7500 COGS year two

You had a total of $8000 of stuff in that second year, and ended with $500 of it = $7500 COGS.