Jeff, The following treatments are generic from a basic accounting textbook and should not be taken as accounting advice that is relevant to your specific circumstances.
This is the direct write off method: You write it off as an expense to the COGS account i.e credit the Asset:Inventory account and debit the Expense:COGS account. This would usually be used if the write off amounts are small and irregular. (Using this method can distort the gross margin where writeoffs are significant and is not recommended for significant writeoffs You can also create an Expense:WriteOffs account rather than using COGS if the amount of the write offs is significant and needs to appear as a line item in your reports. In the allowance method, rather than crediting the inventory account directly you set up a contra sub account of the Asset :Inventory account usually named something like Asset:Inventory:InventoryReserve and credit that and again debit the expense account. This is the usual method where the inventory may have lost value but isn't being disposed of immediately. At actual disposal of the asset the Reserve account is debited and the Inventory account is credited. If the value of inventory falls below its cost, it is usually written down rather than written off and a separate expense account Expense:Write Downs is used instead of the Expense:Write Offs account. David Cousens On Sun, 2023-06-25 at 15:42 +1000, Jeff wrote: > Hi List, > > This is more a general accounting question than specifically a GnuCash > one, but thought there might be better help on the list for it. > > Background: > I use GnuCash for business use, and track the purchase of inventory. > This goes into an Inventory Account > When sold, the sale gets recorded against the Income Sales, and the cost > of the goods gets recorded in COG's. > > Issue: > I have some stock that is either obsolete, or otherwise no longer fit > for sale. Just wondering what is the "correct" way to write this stock > off. (In case it matters, I am located in Australia). > My thoughts were: > - Have an Account called Write-offs to record the transfer of the dollar > amount from Inventory to Write-Offs. > - Also, record the cost of goods in the COG's account, just like it was > sold. This is the main bit I am unsure of. > > Any other suggestions, or am I looking at this completely wrong? > > Regards, > Jeff, > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
