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B
bgoon
December 18, 2018
Question

Inventory cost adjustment

  • December 18, 2018
  • 1 reply
  • 2 views

How do you write down inventory? I have a client with old items that need to be adjusted to market value. How do I adjust the inventory cost on the item while leaving the quantity the same? I know it can be done in desktop. I can't figure online out.

Thank you!

1 reply

Rustler
Rustler
Level 15
December 18, 2018

market value is not an inventory valuation method during the year

 

Lower of cost or market (LCM) valuation is a tax time concept you can choose.  As the name implies first you have cost, then you find out market, do a spreadsheet and value each item per the lower of the two prices - again that is only for taxes

 

cost is what you paid for it. sell it and take the loss, adjust it off the books after you trash/destroy it

 

but you do not juggle cost

B
bgoonAuthor
December 18, 2018

Their books are kept on the tax basis. I was hoping it could be done like desktop.

Rustler
Rustler
Level 15
December 19, 2018

I keep my books on tax basis

Using LCM is an option for tax reporting valuation, it is not cost accounting.

 

tax reporting can be different than the P&L in a couple of areas, LCM is one of them, 50% deductibility on meals expense is yet another

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