Damaged,obsolete,and out-of-season inventory should be written down to their current estimated net realizable value if that is below cost.

Question

Quizplus · Accepted Answer

According to the Generally Accepted Accounting Principles (GAAP), inventory should be written down to its lower of cost or net realizable value. If the net realizable value of damaged, obsolete, or out-of-season inventory is below cost, it should be written down to that value. This is known as the valuation allowance or provision for inventory obsolescence. Therefore, the statement is true.

Damaged,obsolete,and Out-Of-Season Inventory Should Be Written Down to Their Current