Inventory

[magicone99]

Hi

General question here - say for example you are holding a £100 spare as Inventory on your balance sheet ( Current Asset) , you then use this spare as part of your day to day Operations. Is this simply a case of credit the Inventory , debit the spares/consumables account ?

cheers

 

[Ugo]

Sounds right to me. As long as the spares/consumables account is an expense class on your income statement.

 

[cheesiest]

For an item to qualify as inventory, it has to satisfy 3 conditions.....1. It is held for sale in the normal course of the business, 2. it is in the process of production for such sale. 3. it is in the form of materials or supplies to be used in the production process or in rendering of services. Looks like your question above satisfies no. 3 condition. however your accounting treatment also depends on if you can reliably measure the cost of the day to day use