Writing off inventory involves removing the cost of no-value inventory items from the accounting records. Inventory should be written off when it becomes obsolete or its market price has fallen to a level below the cost at which it is currently recorded in the accounting records. The amount to be written down should be the difference between the book value (cost) of the inventory and the amount of cash that the business can obtain by disposing of the inventory in the most optimal manner. Write-off can also be used for stock that is used internally. 

The Inventory write-off module has two uses:

• To write off stock and services which have been lost, stolen, damaged, given away or used internally.
• To allocate inventory or services expense to a particular job when used in conjunction with the Job costing module.

In accounting terms, inventory write-offs are functionally identical to stock adjustments. 

NOTE: Non-inventory products are not available for write-off.

Prerequisites

• Users require the user permission Production → Inventory write-off tasks to create and edit write off tasks. 

Table of Contents

• Create a new inventory write-off
• Inventory write-off/expense allocation for job costing
• Viewing inventory write-off transactions
• Allocate expenses 

Create a new inventory write-off

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Inventory write-offs are managed from the production module or inventory module. Stock items written off will be removed from your available inventory. 

Create a new inventory write-off:

1. Navigate to Production/Inventory → New → Inventory Write Off.
2. Identify the Location where stock will be written off.
3. Select the relevant Expense account. 
4. To add a product or service to be written off, click + and then select the relevant product or service from your inventory. 
5. Identify the Quantity which will be written off. Cost will be automatically calculated using your chosen Costing Methods and previous transactions.
6. Complete the inventory write-off. This will write off the cost of the inventory to the selected expense account. 

Inventory write-off/expense allocation for job costing

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The inventory write-off function is also used to allocate expenses of stock and services from your inventory to a job. See Job costing for further details. 

Assign inventory to a job:

1. Navigate to Production/Inventory → New → Inventory write-off/Expense allocation or navigate to Production → Jobs, select the job to assign inventory to and click New Expense → Inventory write-off/Expense allocation.
2. Identify the Location where stock will be written off.
3. Select the expense sub-account dedicated to the job in question. If the inventory write-off was created through the job, this will be filled in automatically. 
4. Click + and then select the relevant products and/or services from your inventory. 
5. Identify the Quantity which will be written off. Cost will be automatically calculated using your chosen Costing Methods and previous transactions.
6. Complete the inventory write-off. This will write off the cost of the inventory to the job sub-account. The inventory write-off will then be available on the job screen ready to be invoiced to customers. 

Viewing inventory write-off transactions

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View a list of all inventory write-offs from Inventory → Inventory write-off or Production → Inventory write-off. Clicking on an inventory write-off will show you the details including the accounting transactions for that write-off.

There is no import/export functionality in this section, so it is not possible to view a summary report of inventory write-off transactions from here. Some options for viewing an inventory write-off summary are:

• Using a single expense account for all write off transactions, then running the General ledger report. Inventory write-off transactions can be viewed by checking the relevant expense account. 
• Run the Inventory movement details report and filter by inventory write-off

Allocate expenses

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Customers can allocate write-off expenses to purchase orders, production runs, assemblies, and stock transfers directly from the inventory write-off screen. This is especially useful to customers who make use of co-manufacturing and who want to stay out of production, providing component stock to a co-manufacturer to receive the finished goods on a PO. 

1. Create a new inventory write-off or an open an existing write-off and go to the Financials tab.
2. Click the Expenses button.
   
3. Select at least one expense to allocate.
4. Click the +Allocation button and select what type of task you want to distribute the expenses to: purchase, assembly or stock transfer, or production run.
   
5. Allocate the expenses by selecting the task ID from the dropdown menus and entering the value. 
6. Save your changes when complete. The cost will be distributed based on the total amount of each product included in the task.
   

Once the allocation has been completed will also be visible in the task where the expense was assigned as a manual journal. These will be also synced with your accounting application next time data is synced.