As a continuation of the previous discussion on how to account loss of assets due to recent flooding, today, Thai accountant discusses how to treat such loss on damaged inventories.

To record a loss on diminution in value of inventories, one should consider the following:

If the inventory is completely damaged by floods and is no longer salable, the full amount of the inventory should be recorded as a loss in 2011.

However, if the inventory is partly damaged and can be repaired for sale at a discount, its net realizable value should be determined based on the estimated selling price less the repair cost and costs to sell. If the carrying value of the inventory is higher than the net realizable value, an allowance should be set aside to bring down the inventory to the net realizable value.

For your Thailand accounting and tax questions, contact Thailand accountant, MSNA.