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How do you report a write-down in inventory?

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تم إضافة السؤال من قبل Yazan Ahmad , programmer , wysada
تاريخ النشر: 2016/12/29
manseer muhammed ali
من قبل manseer muhammed ali , Accountant General , Royal Lighting L.L.C & Royal Furnishing LLC

A write-down in a company's inventory is recorded by reducing the amount reported as inventory. In other words, the asset account Inventory is reduced by a credit. The debit in the entry to write down inventory is reported in an account such as Loss on Write-Down of Inventory, an income statement account.

If the amount of the Loss on Write-Down of Inventory is relatively small, it can be reported as part of the cost of goods sold. If the amount of the Loss on Write-Down of Inventory is significant, it should be reported as a separate line on the income statement.

Since the amount of the write-down of inventory reduces net income, it will also reduce the amount reported as owner's equity or stockholders' equity. Hence for the balance sheet and in the accounting equation, the asset inventory is reduced and the owner's or stockholders' equity is reduced.

Soliman Abd  ALmalak Gendy
من قبل Soliman Abd ALmalak Gendy , مدير ادارة مراقبة حسابات , الجهاز المركزى للمحاسبات

A write-dien in a company,s inventory is recorded by reducing the amount reported as inventory. -The assets account inventory is reduced by a cre ,the debit in entry to write down inventory is reported in an account such as loss on incone statement account

Abdullah Aziz Eldain Morsi  Elgendy -        CMA  Candidate
من قبل Abdullah Aziz Eldain Morsi Elgendy - CMA Candidate , Regional Receivable Accountant , Amiantit Group of Companies

Inventory is written down when goods are lost or stolen, or their value has declined. This should be done at once,

not significant you have to use the next entry

 cost of good sold 

 to 

inventory 

 if significant

inventory write downs

to

inventory

 

 

 

 

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