Stock write-downs

Stock that has been damaged, has gone obsolete, or simply will not sell for what it cost has to be reflected in your accounts. Inventory is carried at the lower of cost and what you can realise for it, and scrapped goods have to leave the books entirely.

A stock write-down is the document that does both.

Open it

From Money In, then Products & Services, use the header button - or, on a tracked item, the Write this stock down link on its stock lots. You can also find it by searching for "stock write-down".

Recording or deleting one needs Full Access with write permission. Anyone from the Invoices level up can read one, so the item pages can show what happened to their own stock.

The two kinds of line

Each line on the document is one of two things, and the difference matters:

• Write off - a quantity leaves your stock. Use it for goods that have been scrapped, stolen or destroyed. The units go at what they actually cost you, oldest batch first, exactly as a sale would consume them.
• Write down - the quantity is untouched and the value of your remaining stock is reduced to a figure you state. Use it when the goods still exist but are worth less than you paid.

A write-down can only ever move stock down.

The preview

As you fill the form, Kontala shows what the document will charge.

For a write down the figure is exact - it is simply the difference between what the stock is carried at and the value you typed.

For a write off it is labelled about, and the total becomes Estimated total charge. The exact cost depends on which batches the units come out of, and only the posted document knows that. The gap can be wide: one unit at £50 beside two at £5 previews at £40 and posts at £55.

What it does to your accounts

The charge goes to a Stock Write-Down cost of sales account and comes off the value of your stock.

It is allowable for tax, and it reaches box 17 of the SA103 for an unincorporated business.

There is no VAT on a write-down - it is not a supply, and input tax you have already reclaimed is not clawed back because goods became obsolete.

Deleting one

Deleting a write-down puts the value back.

Kontala refuses the deletion if the stock it touched has moved since - sold, written down again, or restored - because putting the value back onto a batch that is now empty would strand it there permanently. The message says which of the two happened, and what to do about it.

Related

• Stock movements
• Tracked inventory
• Profit and loss