{"id":23165,"date":"2025-07-09T10:52:00","date_gmt":"2025-07-09T09:52:00","guid":{"rendered":"https:\/\/www.sage.com\/en-gb\/blog\/?post_type=sage_glossary&p=23165"},"modified":"2025-07-09T10:52:02","modified_gmt":"2025-07-09T09:52:02","slug":"learn-what-an-inventory-write-down-is-why-it-happens-and-how-it-affects-your-balance-sheet-and-income-statement","status":"publish","type":"sage_glossary","link":"https:\/\/www.sage.com\/en-gb\/blog\/glossary\/learn-what-an-inventory-write-down-is-why-it-happens-and-how-it-affects-your-balance-sheet-and-income-statement\/","title":{"rendered":"What is an inventory write-down and how does it impact the balance sheet?"},"content":{"rendered":"
\n\t
\n\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\tGlossary definition<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
\n\t\t\t\t\t

\n\t\t\t\t\t\tWhat is an inventory write-down and how does it impact the balance sheet?\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t
\n\t\t
\n\t\t\t min read<\/span>\n\t\t\n\t\t\t

Why should you track inventory?<\/h2>\n\n\n\n

Inventory that has become obsolete, spoiled, or damaged often triggers the need for an inventory write-down. <\/p>\n\n\n\n

Raw materials, finished goods and even in-process products may depreciate throughout the year. <\/p>\n\n\n\n

Ordering too much inventory, or ending up with too much on hand is often the culprit. <\/p>\n\n\n\n

Therefore\u00a0tracking inventory<\/a>, not only its count and location, but serial numbers and expiration dates is important. <\/p>\n\n\n\n

With accurate, real-time data and the ability to track inventory trends or\u00a0forecast demand<\/a>, your teams have more control over inventory and are better enabled to help avoid the need for write-downs.<\/p>\n\n\n\n

Inventory write-downs can impact your company\u2019s balance sheet, income statement and net income.<\/p>\n\n\n\n

Once Accounting has determined the write-down amount, they need to determine whether it is significant.<\/p>\n\n\n\n

If the amount is considered small, they may choose to factor the decrease in the cost of goods sold (COGS).<\/p>\n\n\n\n

If the amount is larger and thus more significant, the write-down will most commonly be recorded as a separate line on the income statement.<\/p>\n\n\n\n

You can learn much more about inventory write-downs here<\/a>.<\/p>\n\n\n\n

Sage Intacct as a solution<\/h2>\n\n\n\n

A variety of industries rely on Sage Intacct for accurate, real-time data within streamlined financial and workflow processes.<\/p>\n\n\n\n

Sage Intacct’s\u00a0multi-entity, Intelligent GL<\/a>\u00a0connects to a company’s financial and operational data, helping them gain visibility and control of their inventory, whether it\u2019s in a single supply room, a warehouse, or multiple locations. <\/p>\n\n\n\n

Those companies can be found in the following industries:<\/p>\n\n\n\n