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- Mar 12, 2018
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Hello.
My business experienced a data entry error when upgrading our ERP software that artificially increased inventory and WIP -- and thus retained earnings as well on the balance sheet. During a journal entry my accounting lead had a fat finger moment and two numbers increased relative to what we physically have on hand. Our ERP system calculates COGS based on the roll-up bill of material (BoM) cost of what shipped and so the monthly and annual income statement profit numbers were not changes by the incorrect entries. We have since issued JEs to wipe out both the artificial balance sheet increases -- and again there was no hit to the income statement. That said, ownership is curious if we can now write down the income statement accordingly due to the change in retained earnings? I do not see how we can, as there was no cash/investment made in these virtual assets and therefore there cannot be a legitimate write-down either. Read: these are not tangible assets. A simple note in the annual balance sheet statement seems sufficient. Thanks.
My business experienced a data entry error when upgrading our ERP software that artificially increased inventory and WIP -- and thus retained earnings as well on the balance sheet. During a journal entry my accounting lead had a fat finger moment and two numbers increased relative to what we physically have on hand. Our ERP system calculates COGS based on the roll-up bill of material (BoM) cost of what shipped and so the monthly and annual income statement profit numbers were not changes by the incorrect entries. We have since issued JEs to wipe out both the artificial balance sheet increases -- and again there was no hit to the income statement. That said, ownership is curious if we can now write down the income statement accordingly due to the change in retained earnings? I do not see how we can, as there was no cash/investment made in these virtual assets and therefore there cannot be a legitimate write-down either. Read: these are not tangible assets. A simple note in the annual balance sheet statement seems sufficient. Thanks.