Inventory write-down

An inventory write-down reduces carrying value when expected recoverable value falls below recorded cost. IAS 2 uses the lower of cost and net realisable value, the latter being estimated selling price less necessary completion and selling costs.[1] That describes the accounting framework, not every tax valuation rule.

Damaged or obsolete stock may remain saleable without supporting its book value. Base the estimate on actual condition and selling prospects. A lower offer price, physical disposal and an accounting write-down are different events. A write-down also differs from periodic depreciation of warehouse equipment.