Allowance for Obsolete/Damaged Inventory
Code: 1155
👁 Views: 115
Account Information
| Financial Statement | Statement of Financial Position |
| Normal Balance | Credit |
Definition
Estimated value of damaged or unsalable goods.
Common Journal Entries
Create allowance for damaged or unsalable goods
Dr. Obsolete Inventory Expense
Cr. Allowance for Obsolete/Damaged Inventory
📐 IFRS vs US GAAP Accounting Treatment
IFRS
IAS 2
Inventories
US GAAP
ASC 330
Inventory
❓ Frequently Asked Questions
Q: Can an obsolete inventory allowance be reversed if the goods' condition improves?
A: Under IFRS, the allowance can be reversed if net realizable value increases. Under GAAP, the allowance cannot be reversed.
Q: Can obsolete allowance be reversed if goods condition improves?
A: Under IFRS, the allowance can be reversed if net realizable value increases. Under GAAP, it cannot be reversed.