writing off stock

[geoffb]

Hi
We have got about £5000 of stock that has become unsellable due to a problem with the plastic its made from.
Obviously this is going to impact our business greatly

Can anyone tell me if there is any way we can recoup our losses

Any advice greatly received !

 

[Anna Chandley]

The cost of purchasing the stock will already be included in your accounts. Either in purchases or in the opening stock value depending on when the stock was bought. When calculating the closing stock figure for the year you will value the stock at the lower of cost and net realisable value. As the stock cannot be sold its net realisable value will be nil and the closing stock value, for this particular product, will be nil.

Adjusting the closing stock value will mean that you get tax relied for the cost of the unsellable stock.

 

[Fred_the_frog]

Hi
We have got about £5000 of stock that has become unsellable due to a problem with the plastic its made from.
Obviously this is going to impact our business greatly

Can anyone tell me if there is any way we can recoup our losses

Any advice greatly received !

Recouping your losses is something you should think about as the business owner! Can you not send it back to the supplier or anything? All you can do from an accounting point of view is write off the stock which will reduce your tax liability, as in the post above.

 

[ed@easyaccountancy]

Hi Geoff


If the stock that you cannot sell is merely thrown away, or otherwise disposed of for nil proceeds, then you will be able to get relief on the £5,000 as a deduction against income for the year. As Anna mentions, this relief is given by reducing closing stock down by £5,000.


The best option may be to try to return the stock so your supplier for a refund if that is still an option.