Cogs journal entry4/18/2023 ![]() It should be noted though that if a piece of inventory loses all its value as opposed to just some, it would not be eligible for a write-down. Items affected by a range of different scenarios-like damage, theft and shifting market trends-are all subject to an inventory write-down if their actual worth drops below the book value. This includes the raw materials, in-progress products and finished merchandise. Inventory can be written down if the value is reduced. What Items are Eligible for a Write-Down? Companies can reduce incidents of inventory write-downs through effective inventory management strategies like avoiding excessive inventory, reviewing order frequency, tracking trends in demand and implementing precautionary measures to avoid theft or damage.An inventory write-down impacts both the income statement and the balance sheet-reducing net income, retained earnings and shareholder equity.Inventory often loses value because of obsolescence, theft, decrease in consumer demand, damage, spoilage, misplacement and shifts in the market. ![]() An inventory write-down differs from an inventory write-off because it deals with inventory losing some of its value, not all of its value. ![]()
0 Comments
Leave a Reply.AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |