Most manufacturing and commercial concerns that hold trading stock find themselves having to write off a certain proportion of their stock value at the end of each financial year in respect of slow moving and obsolete stock. The strange thing is that, although the goods and materials were probably purchased by profit-responsible executives of the comapany, it is usually the financial staff who determine what and how much should be written off each year.
Accountants usually make provision in their accounts for stock which everyone agrees is definitely obsolete and unsaleable in the normal course of business. They also determine the write-off in respect of obsolete and slow moving stock on the basis of the age of the stock or perhaps a percentage of the stock value. Such arithmetically conceived write-offs are in accordance with accounting standards and conventions which require that accounts are drawn up on a reasonably prudent basis. Very often the detail of these various provisions is invisible to other members of the company. Perhaps greater visibility would help your company to establish sensible policies with regards to using or liquidating such stocks. ..more
