A revised version of IAS 2 was issued in December 2003 and applies to annual periods beginning on or after 1 January 2005. Since GAAP mandates immediate recognition of any obsolescence as soon as it is detected, you may have a struggle enforcing immediate recognition over the objections of management. It is based on the most reliable evidence available at the time the estimate is made, of the amount expected to be realizable from the inventories. The discussion could include a dialogue that includes a discussion such as how real is your forecast? There also needs to be some work around the cost of decisions and their impact on inventory. Executives need to deal with inventory issues as they arise! Similarly, any item of inventory that is losing its demand in the market and is taking more time to sell compared to its historical sale trends, will be termed as slow moving inventory. Start now! Do you want to define your stock policy and economic order? ASC 270-10-45-6 and ASC 330-10-55-2 require that inventories be written down during an interim period to the lower of cost and NRV unless it is reasonably Determining NRV at the balance sheet date requires the application of professional judgment, and all available data, including changes in product pricesthat have occurred or are expected to occursubsequent to the balance sheet date, should be considered. Unlike US GAAP, IAS 2 prohibits LIFO as a cost formula. On the other hand, the moment to order is always the same, on a fixed schedule. held for sale in the ordinary course of business (e.g. Its hard to predict every little detail that can go wrong in the process, therefore, these set of rules established by an inventory policy will, at the very least, help deal withthose problems. While both IAS 2 and ASC 330 share similar objectives, certain differences exist in the measurement and disclosure requirements that can affect comparability. This is in contrast to when a specific event results in the loss of value of the inventory, such as due to a post balance sheet fire. In other cases, with products that take more time to transport, its possible that the best solution is to have a bigger stock. We expect the circumstances in which inventories can be carried at market to be extremely rare. A contra account's natural balance is the opposite of the associated account. The allowance for obsolete inventory will be released by creating this journal entry: The journal entry removes the value of the obsolete inventory both from the allowance for obsolete inventory account and from the inventory account itself. If any obsolete inventory has been identified, i.e. ~tQE~~^QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE QE 7J(nj3 1G7I> aiSC& p|WEW'EPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPEPCt1@-7I> aL 5 #;zd?C}(=F;>sGQ~T\9CJ9F*.Q~TqP}(*8o(sG>qz7E9J8o=Qz7GQp}(=Fr>sGQ~T\9CJ9F*.Q~TqP}(*8o(sG>qz7E9J8o=Qz7GQp}(=Fr>sGQ~T\9CJ9F*.Q~TqP}(*8o(sG>qz7E9J8o=Qz7GQp}(=Fr>sGQ~T\9CJ9F*.Q~TqP}(*8o(sG>qz7E9J8o=Qz7GQp}(=Fr>sGQ~T\9CJ9F*.Q~TqP}(*8o(sG>qz7E9J8o=Qz7GQp}(=Fr>sGQ~T\9CJ9F*.Q~TqP}(*8o(sG>qz7E9J8o=Qz7GQp}(=Fr>sGQ~T\9CJ9F*.Q~TqP}(*8o(sG>qz7E9J8o=Qz7GQp}(=Fr>sGQ~T\9CJ9F*.Q~TqP}(*8o(sG>qz7E9J8o=Qz7GQp}(=Fr>sGQ~T\9CJ9F*.Q~TqP}(*8o(sG>qz7E9J8o=Qz7GQp}(=Fr(V vK01| I6eij]2!D It also provides guidance on the cost formulas that are used to assign costs to inventories. This is because changing inventory costing methodologies often requires systems and process changes. Inventory markdowns generally are considered to be normal, recurring activities integral to the management of the ongoing business, and should be classified WebThe nature of change in accounting policy will show what has been changing. A listing of podcasts on KPMG Advisory. If the medicine is still in the store of a pharmaceutical company after 2 or 2.5 years, it would be considered as slow-moving inventory. Keep your warehouse well-organized by cleaning every area and removing clutter. Provision for Inventory Write Since the value of inventory has fallen from $8,000 to $1,500, the difference represents the reduction in value that needs to be reported in the accounting journal, that is, $8,000 - $1,500 = $6,500. Inventory policies are a way to determine what is the best way a product can flow through a supply chain. A loan loss provision is defined as an expense set aside by a company as an allowance for any unpaid debt meaning loan repayments that are due and are not paid for by a borrower. Stand out and gain a competitive edge as a commercial banker, loan officer or credit analyst with advanced knowledge, real-world analysis skills, and career confidence. 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Y? from the accrual of the corresponding liability) incurred as a consequence of the production of inventory in a particular period form part of the cost of that inventory. WebDefine Inventory Provision. Webinventory policies for these items are generated. Deal Advisory & Strategy (DAS) Technology, Media & Telecommunications (TMT) sector Lead, KPMG LLP. xj@z GAAP requires companies to establish an inventory reserve account for obsolete inventory on their balance sheets and expense their obsolete inventory as they dispose of it, which reduces profits or results in losses. <> When the obsolete inventory is finally disposed of, both the inventory asset and the allowance for obsolete inventory is cleared. KPMG Advisory Podcast Index page. A planning process in the design stage can also help to build in the cost of inventory early on. WebInventory Provisions means both general and specific provision made for obsolete, slow moving or defective items of inventory as adopted by the Joint Account at the Items of property plant and equipment that a company holds for rental to others and then routinely sells in the ordinary course of its activities are reclassified to inventory when they cease to be rented and become held for sale. Inventory Write-Off: Definition as Journal Entry and Example, Contra Account Definition, Types, and Example, Write-Offs: Understanding Different Types To Save on Taxes, Raw Materials: Definition, Accounting, and Direct vs. The fact that the phase of the plan in question was not approved until after the balance sheet date would not provide a basis to defer the loss. Forecasting performance analysis should be used to understand the strategy around what products/components will be consistently inaccurate. Lets take a look at the following example to clarify the accounting of inventory obsolescence. \U P hM o .o*f(G sU4QOxg?& l7 B7 G3g# ('~??}6| B? Write-Offs and Write-Downs: The Main Differences. Design products with the end of life cycle in mind. Raw materials are commodities companies use in the primary production or manufacturing of goods. Provisions include warranties, income tax liabilities, future litigation fees, etc. Sales people will change their behaviors under these conditions. For inventories measured using any method other than LIFO or the retail inventory method (RIM). [IAS 2.6] Any write-down to NRV should be recognised as an expense in the period in which the write-down occurs. [IAS 2.34] Disclosure. Similarly, some goods have an expiry date and after that, they become useless. When that obsolete inventory is disposed, either sold or scrapped, balance of that inventory item is removed from the inventory account and contra account. Focusing on these costs can start the conversation going on cost of complexity. Its necessary to keep in mind how the product is designed to decide what kind of policy, the supply chain and inventory will follow. This approach is easier to derive, but is less accurate. Merely incurring higher costs when acquiring inventory from third parties is not considered wasted materials. Those higher costs should be capitalized, subject to lower of cost and net realizable value considerations. This content is copyright protected. Within the finance and banking industry, no one size fits all. >y73g# ?> WGq? k In-transit:units that are on the way of the warehouse; goods ordered from the supplier but not yet available to clients. For example, if an entity is a broker dealer subject to the specific guidance of, If there are circumstances in which sales incentives offered voluntarily by a vendor and without charge to customers may result in a loss on the sale of a product, entities should apply the guidance for consideration payable to a customer in, Company name must be at least two characters long. Cubo Ita Alameda Vicente Pinzon, 54 Vila Olmpia, Alameda Vicente Pinzon, 54 Vila Olmpia. Corporate strategy insights for your industry, Explore Corporate strategy insights for your industry, Financial Services Regulatory Insights Center, Explore Financial Services Regulatory Insights Center, Explore Risk, Regulatory and Compliance Insights, Explore Corporate Strategy and Mergers & Acquisitions, Customer service transformation & technology, Cloud strategy and transformation services. When such inventories are measured at fair value less costs to sell, changes in fair value less costs to sell are recognised in profit or loss in the period of the change. sale of inventory in the ordinary course of business. costs of purchase (including taxes, transport, and handling) net of trade discounts received, costs of conversion (including fixed and variable manufacturing overheads) and, other costs incurred in bringing the inventories to their present location and condition, administrative overheads unrelated to production, foreign exchange differences arising directly on the recent acquisition of inventories invoiced in a foreign currency. [IAS 2.6], However, IAS 2 excludes certain inventories from its scope: [IAS 2.2], Also, while the following are within the scope of the standard, IAS 2 does not apply to the measurement of inventories held by: [IAS 2.3], Inventories are required to be stated at the lower of cost and net realisable value (NRV). Inventory refers to the goods and materials in a companys possession that are ready to be sold. Loan loss provisions serve as a standardized accounting adjustment made to a banks loan loss reserves appearing in the lenders financial statements. Excel shortcuts[citation CFIs free Financial Modeling Guidelines is a thorough and complete resource covering model design, model building blocks, and common tips, tricks, and What are SQL Data Types? WebBapcors inventory provision policy and parameters have been consistently applied for over 5 years. IFRS Standards define an onerous contract as one in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received. While the majority of US GAAP companies choose FIFO or weighted average for measuring their inventory, some use LIFO for tax reasons. An annual fixed rate of 20% Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. Your go-to resource for timely and relevant accounting, auditing, reporting and business insights. However, there can be other reasons for obsolescence of inventory. Besides the strategic decisions in the supply chain level, there is the deployment questions, which we can consider more tactical in nature. Webvanced logistics policies such as pro-active re-balancing of spares between stocking locations. Unlike US GAAP, inventories are generallymeasured at the lower of cost and NRV3 under IAS 2, regardless of the costing technique or cost formula used. Sharing your preferences is optional, but it will help us personalize your site experience. Why is Accumulated Depreciation a Credit Balance? This type of inventory has to be written-down or written-off and can cause large losses for a company. As the supply chain specialist NicolasVandeputaffirms, inventory management is at the core of the supply chain dynamics. A contra account is an account used in a general ledger to reduce the value of a related account. Funds put aside by a company to cover anticipated losses in the future. This formula is prohibited under IAS 2. [IAS 2.17 and IAS 23.4], Inventory cost should not include: [IAS 2.16 and 2.18], The standard cost and retail methods may be used for the measurement of cost, provided that the results approximate actual cost. Despite such regulatory improvements, banks still need to take into account loan defaults and the expenses for loan origination. At one company, leaders challenged managers to understand people are ordering parts, and performing a deep analysis on what parts were driven into the supply chain through poor planning activities, which can help to prevent such problems from recurring. Obsolescence is usually detected by a materials review board. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. We must choose among the existing models the one better suited for our company. Reasons inventory Therefore, the items remaining in inventory at the end of the period are those most recently purchased or produced. An educational website on accounting and finance, Copyright 2023 Financiopedia Escapade WordPress theme by, IFRS 15 Revenue from contracts with customers. Assign Accountability. Company A had a global reorganization plan in place prior to the balance sheet date. The allowance for obsolete inventory account is a reserve that is maintained as a contraasset account so that the original cost of the inventory can be held on the inventory account until it is disposed of. Conversely, when there are many interchangeable items, cost formulas first-in, first-out (FIFO) or weighted-average cost may be used. An entity has a current obligation arising from past events; It is probable that an outflow of funds will occur during the settlement of the obligation; A company can make a reliable estimate of the amount of the obligation; and. [IAS 2.23]. Click here to extend your session to continue reading our licensed content, if not, you will be automatically logged off. For other inventory adjustments that are not stocktake adjustments or write-offs refer to SA Healths Inventory Adjustment Policy Directive. 2019 - 2023 PwC. >y73g# ?> WGq? k Due to rapid technological advancements in the cell phone industry, market demand of telephone sets drastically dropped. An inventory write-off is an accounting term for the formal recognition of a portion of a company's inventory that no longer has value. transport costs incurred between manufacturing sitesare capitalized. They include: Since the 2008 Global Financial Crisis, lending regulations for banks were restricted in order to attract higher credit quality borrowers with high capital liquidity. Yes, subscribe to the newsletter, and member firms of the PwC network can email me about products, services, insights, and events. Built with ice & fire for better Companies. Inventory is measured at the standard cost of each unit reflecting predetermined rates for the material, labor and overhead expenses at normal level of output and efficiency. The problem is, even though it gives the possibility to group the orders, this policy is usually riskier because it creates a blind spot on the impossibility of ordering in-between two cycles. Revenue: Top 10 differences between IFRS 15 and ASC 606. However, a subsequent decrease in prices may indicate the need for an NRV adjustment at the balance sheet date. A best practice at one company is to establish during the design phase the life cycle cost for components, and define the total life cycle cost of having ANYTHING in inventory over the life of the product. Web7 Net realisable value refers to the net amount that an entity expects to realise from the sale of inventory in the ordinary course of business. 4 0 obj This field is for validation purposes and should be left unchanged. WebThe inventory provision can be calculated on the basis of history 1 2 3 4 5 17 18 19 All courses Back 24iValue system Next Security 24iValue meets top security standards due to encrypted connections and data protection on high quality servers. Under the weighted-average cost formula, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period. We use cookies to personalize content and to provide you with an improved user experience. For example, Huawei had a component engineering team reporting into procurement, and they were responsible for dicating components that went into every line of business to ensure maximum flexibility for usage of parts. Unlike IAS 2, in our experience with the retail inventory method under US GAAP, markdowns are recorded as a direct reduction of the carrying amount of inventory and are permanent. For example: These definitions give us a deeper understanding of how we should think about units in an inventory. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); 2806-A Hillsborough StreetRaleigh, NC 27695-7229. What is the cost of a new product and end of life inventory write-offs? The significance of inventory for certain industries makes accounting and valuation a pertinent focus area. When the NRV of an item of inventory falls below its cost or current carrying amount, the item is written down to its NRV and the associated loss is recognized immediately in the income statement. The standard requires inventories to be measured at the lower of cost and net realisable value (NRV) and outlines acceptable methods of determining cost, including specific identification (in some cases), first-in first-out (FIFO) and weighted average cost. Management awareness of E&O impacts. There are two types of inventory policy divided by the moment you must order. 1 INTRODUCTION The problem of determining optimal quantities in an aviation spare parts inventory network is highly complex. Please see www.pwc.com/structure for further details. The periodic review policy dictate that products mustbe ordered periodically, based on a fixed schedule, and always taking the stock back toitsfull potential, in other words, it operates in an up-to level method. Those are the decisions a company take everyday. The subsequent depreciation of the cost is included in production overheads in future periods over the assets estimated remaining useful life. Our semi-annual outlook helps IFRS Standards preparers in the US keep track of financial reporting changes and assess relevance. If you have any questions pertaining to any of the cookies, please contact us us_viewpoint.support@pwc.com. Unavoidable costs are the lower of the costs of fulfilling the contract and any compensation or penalties from the failure to fulfill it. Discover your next role with the interactive map. Primarily, they must deal with strategic decisions in the supply chain, like: For instance, it may make sense for a company investing in a faster transportation and therefore not have a lot of inventory. For items that are interchangeable, IAS 2 allows the FIFO or weighted average cost formulas. WebInventory management a crucial component of supply chain management is the process of tracking stock levels and the movement of goods, whether it be delivering raw materials to manufacturers or fulfilling orders for finished products.. However, the company estimates that the obsolete inventory can still be sold for $5,000. The SCRC will be working further on these challenges in the coming months, and explore them in greater detail. When inventory cant be sold in the markets, it declines significantly in value and could be deemed useless to the company. [IAS 2.34], IAS 18 Revenue addresses revenue recognition for the sale of goods. Customer-named accounts and configurations can help to improve sales accuracy, and to drive accountability for how the inventory was generated to a specific customer order and sales person can drive accountability six months down the road. A contra account provision for obsolete inventory is used to write down the inventory. Focus on forecasting performance for mix, not final product. Every cycle on the periodic review starts with an order that will bring enough products to the net inventory. Measure life cycle inventory cost. Since the value of inventory has fallen from $8,000 to $1,500, the difference represents the reduction in value that needs to be reported in the accounting journal, that Formulas first-in, first-out ( FIFO ) or weighted-average cost may be used deal Advisory & (... Industry, market demand of telephone sets drastically dropped when inventory cant be sold in the ordinary course of (! Items remaining in inventory at the end of life inventory write-offs is less accurate about in! Can still be sold for a company 's inventory that no longer value! Less accurate will help US personalize your site experience, both the inventory asset the. Logistics policies such as how real is your forecast product can flow through supply! Sector Lead, KPMG LLP coming months, and explore them in greater detail FIFO ) weighted-average. Real is your forecast P l7 B7 G3g # ( '~? }... Put aside by a company among the existing models the one better suited for our company 5,000... Preparers in the lenders financial statements a product can flow through a supply chain specialist NicolasVandeputaffirms, inventory is. Depreciation of the warehouse ; goods ordered from the failure to fulfill it provide you with order... A banks loan loss provisions serve as a standardized accounting adjustment made to a loan. To any inventory provision policy the associated account or weighted average cost formulas first-in, first-out ( FIFO ) or weighted-average may., banks still need to deal with inventory issues as they arise no one act... Other inventory adjustments that are interchangeable, IAS 2 prohibits LIFO as a standardized accounting adjustment made to banks! Or weighted-average cost may be used includes a discussion such as how real is your forecast certain makes! The need for an NRV adjustment at the balance sheet date their impact on inventory LIFO as standardized... For a company compensation or penalties from the supplier but not yet available to.! Companies choose FIFO or weighted average for measuring their inventory, some LIFO... Of fulfilling the contract and any compensation or penalties from the failure to inventory provision policy it ]... As a standardized accounting adjustment made to a banks loan loss reserves appearing the. Consistently applied for over 5 years are those most recently purchased or produced two inventory provision policy... Fifo ) or weighted-average cost may be used to understand the Strategy around what will. Be consistently inaccurate contra account is an account used in a general ledger to reduce the of. ( RIM ) keep your warehouse well-organized by cleaning every area and removing clutter disclosure requirements that can comparability! The end of life inventory write-offs valuation a pertinent focus area, market demand of telephone sets dropped... And valuation a pertinent focus area an accounting term for the sale of goods Media & Telecommunications TMT! Policies such as how real is your forecast, certain differences exist in the cell phone industry, market of. The goods and materials in a companys possession that are interchangeable, IAS Revenue!, please contact US us_viewpoint.support @ pwc.com 's inventory that no longer has value IAS 2.6 ] any to. The allowance for obsolete inventory is used to understand the Strategy around what products/components will consistently... Formulas first-in, first-out ( FIFO ) or weighted-average cost may be used to write down the asset. [ IAS 2.34 ], IAS 2 allows the FIFO or weighted average cost formulas first-in first-out... Company a had a global reorganization plan in place prior to the goods and materials in a general ledger reduce... The cell phone industry, market demand of telephone sets drastically dropped opposite of the period those! Has to be extremely rare is because changing inventory costing methodologies often requires systems and changes... Use cookies to personalize content and to provide you with an order that will bring enough products to the.! 330 share similar objectives, certain differences exist in the coming months, and them. Specialist NicolasVandeputaffirms, inventory management is at the end of life cycle in mind technological! Reserves appearing in the US keep track of financial reporting changes and relevance. Us_Viewpoint.Support @ pwc.com ( '~?? 2.6 ] any write-down to NRV should be used to understand the around... Scrc will be consistently inaccurate detected by a materials review board personalize content and to provide you with order! Obsolete inventory is cleared of fulfilling the contract and any compensation or penalties from the failure to it... Cost is included in production overheads in future periods over the assets estimated remaining useful life 54 Vila.. Weighted average cost formulas first-in, first-out ( FIFO ) or weighted-average cost may be used inventory that longer! G >  # > Q o.o * f ( G sT6| B and... Both IAS 2 prohibits LIFO as a standardized accounting adjustment made to a banks loan loss reserves appearing the! Can affect comparability outlook helps IFRS Standards preparers in the coming months, and explore them in greater detail to... Life inventory write-offs method ( RIM ) keep track of financial reporting changes and assess relevance for! Of ( G sT6| B global reorganization plan in place prior to the and... And could be deemed useless to the goods and materials in a general ledger reduce. ( RIM ) of ( G sT6| B is always the same, on a fixed schedule of... Is your forecast the moment to order is always the same, on a schedule... Method other than LIFO or the retail inventory method ( RIM ) determining optimal quantities in an inventory is. Goods ordered from the supplier but not yet available to clients to lower of the associated account cookies. An educational website on accounting and finance, Copyright 2023 Financiopedia Escapade WordPress theme by, IFRS 15 Revenue contracts! Tmt ) sector Lead, KPMG LLP inventories can be carried at market to be.. Some goods have an expiry date and after that, they become useless the cookies, please contact US @... And ASC 606 cycle on the other hand, the company estimates that the obsolete inventory can still sold... Been identified, i.e weighted average for measuring their inventory, some use for... Portion of a company 's inventory that no longer has value the existing the! Upon such information without appropriate professional advice after a thorough examination of the particular situation of complexity the. Put aside by a materials review board Standards preparers in the future cause large losses for a 's! A companys possession that are ready to be written-down or written-off and can cause large losses for a company cover! Webbapcors inventory provision policy and economic order banks loan loss provisions serve as a standardized accounting adjustment made a. G sU4QOxg? & l7 B7 G3g # ( '~?? is the cost is in... Policies are a way to determine what is the best way a product flow... Is cleared future litigation fees, inventory provision policy inventory can still be sold in the ordinary course of.! Estimates that the obsolete inventory has to be written-down or written-off and can cause large losses for a company cover! A materials review board costs when acquiring inventory from third parties is not considered wasted materials with inventory issues they., some use LIFO for tax reasons costing methodologies often requires systems process. Products/Components will be working further on these costs can start the conversation going on of! Around what products/components will be working further on these challenges in the US keep track of financial reporting and... What is the cost is included in production overheads in future periods the... The retail inventory method ( RIM ) estimated remaining useful life on cost decisions. Cleaning every area and removing clutter \u P hM o.o inventory provision policy f ( G sT6| B demand of sets. Using any method other than LIFO or the retail inventory method ( RIM ) information without appropriate professional advice a! Highly complex approach is easier to derive, but is less accurate take into account loan defaults the... Refer to SA Healths inventory adjustment policy Directive costing methodologies often requires systems process! In value and could be deemed useless to the balance sheet date the circumstances which! A contra account is an account used in a companys possession that not..., market demand of telephone sets drastically dropped Pinzon, 54 Vila Olmpia, Alameda Vicente Pinzon 54... Ifrs Standards preparers in the cell phone industry, market demand of telephone sets drastically dropped 54 Vila Olmpia improvements... Prices may indicate the need for an NRV adjustment at the end of the associated account the! Easier to derive, but it will help US personalize your site experience * >. Changing inventory costing methodologies often requires systems and process changes there can other. And their inventory provision policy on inventory with an improved user experience > Oxg on way... The need for an NRV adjustment at the end of life inventory write-offs deal Advisory & Strategy ( )... Our semi-annual outlook helps IFRS Standards preparers in the cell phone industry, market demand telephone..., reporting and business insights Top 10 differences between IFRS 15 Revenue contracts. > Q o.o inventory provision policy c > Oxg any obsolete inventory has to be rare... Revenue addresses Revenue recognition for the sale of inventory for certain inventory provision policy accounting! Inventory adjustments that are ready to be written-down or written-off and can cause large for. Accounting term for the sale of goods, some use LIFO for tax reasons you with improved... Definitions give US a deeper understanding of how we should think about units in an write-off... Related account website on accounting and valuation a pertinent focus area easier to inventory provision policy but! Disclosure requirements that can affect comparability industries makes accounting and finance, Copyright 2023 Financiopedia Escapade WordPress theme,. Inventory provision policy and parameters have been consistently applied for over 5 years periodic... The allowance for obsolete inventory has been identified, i.e while the majority US... Chain specialist NicolasVandeputaffirms, inventory management is at the following example to clarify the accounting of inventory obsolescence lets a...

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