QUESTION 3 OF 25

What is obsolescence expense?

Obsolescence refers to inventory that no longer has value or has reduced value. It is inventory that either cannot be sold or will be sold at a steep discount. The interview candidate should be able to define obsolescence and also speak to its accounting treatment.

"Obsolescence occurs when inventory becomes obsolete. As a result, the inventory cannot be sold or is expected to be sold at discounted pricing. The obsolescence reserve is a contra asset on the balance sheet that reduces the gross inventory to its expected value net of obsolete inventory. Obsolescence expense on the income statement reflects the periodic changes in that reserve balance."

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Inventory Accountant Mock Interview

What is obsolescence expense?

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25 Inventory Accountant Interview Questions & Answers