What are the journal entries to record the impairment of inv

What are the journal entries to record the impairment of inventory?

Solution

Solution:

Impairment of Inventory means the inventory is estimated to be worth less than the value currently shown in accounting records. Impairment of Inventory is the process of reducing the value of inventory of a business. It is also known as Inventory Write Down.

The value of inventory is required to be reduced.

If inventory write downs are not significant, the journal entry is as follows:

Account Titles

Debit

Credit

Cost of Goods Sold

XX

    Inventory

XX

If inventory write downs are significant, the journal entry is as follows:

Account Titles

Debit

Credit

Inventory Write Downs (Expense)

XX

    Inventory

XX

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you