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Up2
Why when we say inventory decrease (write-down), the COGS will increase??
I think in a way that when inventory wrtie-down, there will be less (value) of inventory, therefore cost of selling less value of inventory will be decreased (COGS decrease).
Would anyone correct me on this? Thanks.
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Up1
Beginning inventory + Purchase – ending inventory = COGS
Lets say its, 200+100-50= 250
If inventory w/d happens i.e ending inventory decrease to for eg. 25
It will be 200+100-25 = 275 i.e increase in COGSLet me know if makes sense.
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Up0
A write-down of inventory isn’t just assuming they were never there, but rather taking the loss.
One way to think of this is “selling your inventory at $0”, so your cost of written-off inventory becomes COGS.
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