Any accountants out there?
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Posting Guru
Joined: Jun 2002
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From: Home, at last!
Any accountants out there?
I have a simple question of which I need clarification.
I closed my business last year and had a surplus of inventory that was scrapped. My understanding is the resale value of scrapped inventory is to be deducted from gross income.
Do I understand this correctly?
I closed my business last year and had a surplus of inventory that was scrapped. My understanding is the resale value of scrapped inventory is to be deducted from gross income.
Do I understand this correctly?
FTE Leadership Emeritus
Joined: Aug 2006
Posts: 47,280
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From: DELAWARE, The First State
Not exactly. You can write the inventory down to the lesser of cost or market value. If the excess inventory has NO value then you would write it down to zero.
You cannot deduct it from gross income, but take the writedown as an inventory adjustment to purchases. In layman's terms you write off the original purchase cost in the year it was junked, so to speak.
You cannot deduct it from gross income, but take the writedown as an inventory adjustment to purchases. In layman's terms you write off the original purchase cost in the year it was junked, so to speak.
