Writing Off Stock

[carl.robertson]

Hi All,

Yet again another question for all you experienced members as I am a newbie and still learning lol

How/What is the best way to write stock off as I have a few items that need to be written off due to damage (caused by me unforutnatley)

I am unsure how to record this on my accounts

any help would be appreciated please

thanks

[Jenni384]

They get written off at the end of the year.
You've already claimed back the purchase of the goods. You won't sell them, so there will be no income from them (and thus no tax).

When you do a stocktake at the end of the year, instead of valuing those items at the cost price, like you would with normal stock that simply hasn't been sold, you value them at their net resaleable value - likely nil.

Stock is always valued at the lower of the cost and net resaleable value.

The reduction in your stock value has the effect of writing it off in the accounts.

You can't actually make an entry in the accounts that relates to the original value of the items as then you'd be claiming back the value twice. Hope that makes sense :)

[elainec100@cheapaccounting]

The answer depends on how you record purchases - do you have a stock accounting system?

I will assume not.

So stock write offs will drop out at the year end.

If this is not your first year you have opening stock brought forward - value at the lower of cost and net realisable value.

Net realisable value - what you can sell it for. Example in a sale you may reduce it to below the cost price to get rid of it or you may scrap it. So the value is the lower of cost and the scrap or sales value.

You add purchases to the opening stock and at the year end do a stock take and arrive at closing stock valued as above.

So the cost of sales figure is:

opening stock plus purchases less closing stock

If you have written down the value of the stock then the recording of the write off is included

Hope this makes sense!

[carl.robertson]

They get written off at the end of the year.
You've already claimed back the purchase of the goods. You won't sell them, so there will be no income from them (and thus no tax).

When you do a stocktake at the end of the year, instead of valuing those items at the cost price, like you would with normal stock that simply hasn't been sold, you value them at their net resaleable value - likely nil.

Stock is always valued at the lower of the cost and net resaleable value.

The reduction in your stock value has the effect of writing it off in the accounts.

You can't actually make an entry in the accounts that relates to the original value of the items as then you'd be claiming back the value twice. Hope that makes sense :)


Thank you for your reply thats very helpful

Thanks

carl