Obsolete Inventory
GAAP requires that all obsolete inventory be written off at the time it's determined obsolete. We recommend that you consult with your accountant on how to best handle your company's strategy. This article will outline some tools in DBA to handle quantity and/or value changes to your inventory.
Never make journal entry adjustments directly to your Inventory account
The Inventory account is a self-adjusting account that is always fully reconciled with the total inventory value of the stock on hand. It is essential that the main Inventory account always tie down to the underlying inventory transactions in the system.
If you wish to reduce the stock quantities to zero for a set of items
You can use the Inventory>Stock Counts or Inventory>Stock Adjustments screen to reduce your quantities on hand to zero for a set of items. This will Credit Inventory and Debit Adjustments - Inventory (or Adjustments - COGs). If you would like to make a Journal Entry to a different account for obsolete inventory, you can use the Inventory>Data Views>Inventory Transactions Detail and isolate the transactions for COUNT or STKADJ for the group of items that you reduced to zero. You can then make a Journal Entry that will Credit your Adjustments - Inventory and Debit the account you created for obsolete inventory. Consult with your accountant on the appropriate account.
If you wish to reduce the inventory value for a set of items and keep the quantities on hand
You can use the Inventory>Change Inventory Costs screen to reduce the Inventory Cost (unit cost) for a set of items. This will Credit Inventory and Debit Adjustments - Inventory (or Adjustments - COGs). If you would like to make a Journal Entry to different count for obsolete inventory, you can use the Inventory>Data Views>Inventory Transactions Detail and isolate the transactions for COSTCHG for the group of items that you reduced. You can then make a Journal Entry that will Credit your Adjustments - Inventory and Debit the account you created for obsolete inventory. Consult with your accountant on the appropriate account.
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