Regarding an Item being "Expensed" or "Inventory" categorization

Dear All,
I am from an Engineering and Procurement based organization utilizing Oracle EBS as an ERP solution. As a engineering company, we maintain a lot inventory (below EBIDTA Line) in the form of tools, equipment etc. At the same time, as any company would include, we have lot of items which are expensed (above EBIDTA line).
We are taking part in this transformation exercise within our company and modifying a lot of our existing oracle process flows. In midst of these changes, we have come up with a conclusion that no item created in oracle should categorized as "Expense" or "Inventory" at the time of creation. It should be the purpose of consumption which should categorize the item as "Inventory or Expense"
However there is a contradiction from some of our peers that no item in oracle can be created without categorizing it as "Expense" or "Inventory" or "Asset".
I consider that as a flaw in the system because no item in the system can be categorized at the time of creation but it should be nature of consumption of the item which should determine the category of item. This seems logical in business and systems process.
However, I would be very much interested to hear from all you. Please advise if it is mandatory as per Oracle to categorize the item while creation.
Sorry forgot to ask one more clarification, If a purchase order is raised with destination type as "inventory" or "expense", does it overwrite the item type and proceed with attaching the item type based on the destination type chosen ??
Regards
Sai Chirala
Edited by: 984720 on Jan 30, 2013 10:24 PM

Hi Sandeep,
Thnx for ur timely reply, should I attach this category set to items in all INV orgs in that OU or only to items in that particular IO?
Bcoz, I have multiple IOs and multiple master organizations with in my operating unit.
Thanks & Regards
shail

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