How to handle unsellable inventory

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I have some inventory that is no longer able to be sold to customers and has a market value of zero. We will not be disposing of it because it can be donated to charity. We will be holding onto this inventory for several months before it is donated. How do I account for this right now in the months before it's donated?
 

Counterofbeans

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From a G/L perspective, this loss is generally reflected on the income statement as cost of goods sold. If material, the loss must be separately captioned in the income statement. While GAAP is not explicit as to presentation, it would appear that this adjustment could either be displayed as a separately identified charge within cost of goods sold or as an administrative expense. The write-down is recorded as a debit to a loss account and a credit either to an inventory or a valuation allowance account.

Since you are holding the inventory for several months, I'd probably use an inventory valuation account.
 
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Just credit inventory to zero and debit one of the account on COGS such as material. As per GAAP, you have to value inventory at lower of Cost or Net Realizable Value (which is $0).
 

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