Inventory write-down
Financial Accounting glossary · Assets: Cash, Receivables, Inventory, PP&E & Intangibles
Definition
Reduction of inventory's carrying amount to reflect NRV or lower of cost; expensed through COGS, generally not reversible under US GAAP (reversible under IFRS).
Inventory write-down in plain English
Imagine you bought 100 phone cases for $10 each to resell, but a newer model came out and now you can only sell them for $6. Accounting says you can't keep pretending they're worth $10 — you must drop their recorded value down to what you can actually get for them (their "net realizable value"), and the $4 loss per case gets counted right away as an expense. In the US, once you've marked them down you generally can't mark them back up later even if prices recover; international rules (IFRS) do allow reversing it. The point is honesty: your records shouldn't claim your stuff is worth more than it really is.
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