A write down of inventory due to obsolescence reduces the amount in the Inventory account and may increase the amount in the Cost of Goods Sold account.

Question

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Writing down inventory due to obsolescence reduces the value of the inventory asset, which is reflected in the Inventory account. However, the cost of the written-off inventory is then recognized as an expense, which increases the Cost of Goods Sold account.

A Write Down of Inventory Due to Obsolescence Reduces the Amount