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Inventory Write-Down Formula

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Inventory Write Down is a reduction in the book value of inventory recorded on the balance sheet to reflect its impairment. Check FAQs

IWD = HC - LCRV

IWD - Inventory Write Down?HC - Historical Cost?LCRV - Lower of Cost or Net Realizable Value?

Inventory Write-Down Example

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Here is how the Inventory Write-Down equation looks like with Values.

Here is how the Inventory Write-Down equation looks like with Units.

Here is how the Inventory Write-Down equation looks like.

15000 = 345000 - 330000

15000 = 345000 - 330000

15000 = 345000 - 330000

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Inventory Write-Down Solution

Follow our step by step solution on how to calculate Inventory Write-Down?

FIRST Step Consider the formula

IWD = HC - LCRV

Next Step Substitute values of Variables

∴

IWD = 345000 - 330000

Next Step Prepare to Evaluate

∴

IWD = 345000 - 330000

LAST Step Evaluate

∴

IWD = 15000

Inventory Write-Down Formula Elements

Variables

Inventory Write Down

Inventory Write Down is a reduction in the book value of inventory recorded on the balance sheet to reflect its impairment.

Symbol: IWD

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Inventory Write Down

Historical Cost

Historical Cost is an accounting principle that states that assets should be recorded on the balance sheet at the original cost paid to acquire them.

Symbol: HC

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Historical Cost

Lower of Cost or Net Realizable Value

Lower of Cost or Net Realizable Value means that inventory should be reported on the balance sheet at either its original cost or its net realizable value, whichever is lower.

Symbol: LCRV

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Lower of Cost or Net Realizable Value

Other formulas in Asset Management category

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AE = \frac{HCIA - RV}{ULA}

Go Net Capital Spending

NCS = ENFA - BNFA + Dep n

Go Residual Income

RI = OI - MRRR \cdot AOA

Go Internal Growth Rate

IGR = RR \cdot ROA

How to Evaluate Inventory Write-Down?

Inventory Write-Down evaluator uses Inventory Write Down = Historical Cost-Lower of Cost or Net Realizable Value to evaluate the Inventory Write Down, The Inventory Write-Down occurs when a company reduces the value of its inventory below its original cost due to various reasons such as obsolescence, damage, or a decline in market value. Inventory Write Down is denoted by IWD symbol.

How to evaluate Inventory Write-Down using this online evaluator? To use this online evaluator for Inventory Write-Down, enter Historical Cost (HC) & Lower of Cost or Net Realizable Value (LCRV) and hit the calculate button.

FAQs on Inventory Write-Down

What is the formula to find Inventory Write-Down?

The formula of Inventory Write-Down is expressed as Inventory Write Down = Historical Cost-Lower of Cost or Net Realizable Value. Here is an example- 15000 = 345000-330000.

How to calculate Inventory Write-Down?

With Historical Cost (HC) & Lower of Cost or Net Realizable Value (LCRV) we can find Inventory Write-Down using the formula - Inventory Write Down = Historical Cost-Lower of Cost or Net Realizable Value.

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Inventory Write-Down Formula

Inventory Write-Down Example

Inventory Write-Down Solution

Inventory Write-Down Formula Elements

Other formulas in Asset Management category

How to Evaluate Inventory Write-Down?

FAQs on Inventory Write-Down

Variable Name