What are the impairment provisions in Principles of Accounting? and be specific

Inventory impairment refers to the part of the inventory cost that cannot be recovered due to the damage of the inventory, the obsolescence of all or part of the inventory, or the sale** is lower than the cost at the end of the interim period or the end of the year, etc., which shall be withdrawn according to the difference between the cost of a single inventory item and its net realizable value, and shall be included in the loss of inventory decline.

The reason is that it provides information to actual and potential investors about future cash inflows or outflows, and the provision for asset impairment pays more attention to the relevance of information. It is generally accepted that the closer an asset is to its true value, the more useful it is for the information user to make investment decisions.

Extended information: 1. Provision and reversal of inventory decline provisions.

Inventories are measured at the lower of cost and variable net worth. If the net realizable value is lower than the cost, a provision for inventory decline shall be made and included in the asset impairment loss. If the original factors that caused the impairment have disappeared, the amount of the impairment should be restored within the amount of the original provision for inventory decline.

Net realizable value = Estimated selling price of inventory - Estimated costs to be incurred at completion - Estimated selling expenses and taxes Warning: Net realizable value is characterized by the projected future cash flows of inventory, rather than the selling price or contract price of inventory.

2. When the enterprise sells its inventory, it shall carry forward the provision for the decline in the value of the inventory corresponding to the inventory at the same time. When carrying forward, the cost of main business or other business costs is debited, and the account of "cost of main business" and "cost of other business" is credited.

3. Use of accounting entries.

In practice, accounting entries are realized by filling in accounting vouchers, which is an important link to ensure the correctness and reliability of accounting records. In accounting, no matter what kind of economic business occurs, it is necessary to determine the accounting entries of the economic business by filling in the accounting vouchers in accordance with the bookkeeping rules before registering the account, so as to correctly record the accounts and check them afterwards. There are two types of accounting entries: simple entries and compound entries.

The specific process is as follows: Step 1: The financial accountant reviews the original vouchers collected, reviews the legitimacy and authenticity of the bills, and signs the original vouchers after the audit and submits them to the financial manager for review and signature The second step:

Classify the original voucher signed by the financial manager and hand it over to the general manager for approval Step 3: Make the accounting voucher after the original voucher approved by the general manager, and print it for the financial manager to review.

Since China's current accounting standards and systems do not specify the recognition criteria for asset impairment, the operability in accounting practice is poor. In 2006, the newly issued Accounting Standard for Business Enterprises No. 8 - Asset Impairment made some new revisions to asset impairment.

1. ".Accounting system for business enterprisesDefinitions

The 2000 Accounting System for Business Enterprises stipulates that "an enterprise shall conduct a comprehensive inspection of all assets on a regular basis or at least at the end of each year, and reasonably anticipate the possible losses of various assets in accordance with the requirements of the principle of prudence, and make provisions for asset impairment of possible asset losses." "There are no specific provisions on the criteria for determining asset impairment.

Accounting Standards for Business Enterprises - Fixed Assets, 2002.

There is also no clear recognition standard for asset impairment, resulting in poor operability in accounting practice.

2. At the end of the accounting period, the enterprise should judge whether there are any signs of possible impairment of assets

The 2006 asset impairment standard stipulates that "an enterprise shall judge whether there are signs of possible impairment of assets at the end of the accounting period." These signs include:

1.The market price of the asset has decreased significantly in the current period, and its decline is significantly higher than expected due to the passage of time or normal use**; 2.The economic, technological or legal environment in which the enterprise operates and the market in which the assets are located have undergone significant changes in the current period or will occur in the near future, thereby adversely affecting the enterprise; 3.

Market interest rates. or other market ROI.

The discount rate at which the enterprise calculates the present value of the projected future cash flows of the asset has been increased in the current period, thus affecting the calculation of the present value of the asset.

As a result, the recoverable amount of assets has been significantly reduced; 4.There is evidence that the asset is obsolete or that its physical condition has deteriorated; 5.assets have been or will be idle, terminated or planned to be disposed of early; 6.

Evidence from internal reporting that the economic effectiveness of an asset has been or will be lower than expected, such as the net cash flow generated by the asset.

or realized operating profit.

or losses) are substantially lower (or higher) than the estimated amount, etc.; 7.Other indications that the asset may have been impaired.

Dear, hello, I am glad to answer for you: Why should the accounting make provision for impairment of inventory with signs of impairmentAnswer: Hello, dear, inventory impairment is because the longer the inventory, the less likely it is to obtain income, and it is possible to be unsalable, and the impairment is to reduce the loss.

The market is changing rapidly, and the inventory owned by the enterprise is higher than the procurement or production cost of the market? If it is higher than the market, the enterprise will inevitably lose money in the next business period, and the enterprise has made an impairment provision for inventory at the end of the previous accounting period, and the next business cycle will be reversed with the inventory, at least not in the current period of the inventory, because this loss has been reflected in the previous accounting period in which the inventory impairment provision was made. The most important point is that the value of the inventory in the balance sheet reflects the market value after the impairment provision has been made.

Summary. Hello, dear, although the initial measurement of inventory is recorded at cost, the inventory may be damaged, obsolete, and the price of goods may occur after entering the enterprise. Therefore, the value of inventories at the end of the accounting period is not necessarily recorded at cost, but should be measured at cost and net realizable value.

When the cost of inventory is higher than its net realizable value, the inventory is impaired and a provision for inventory decline should be made. The accounting entries are: Debit:

Asset Impairment Loss Credit: Provision for Inventory Decline.

Why should an impairment provision be made for inventories with signs of impairment?

Hello, dear, although the initial measurement of inventory is recorded at cost, the inventory may be damaged, obsolete, and the price of goods may occur after entering the enterprise. Therefore, the value of inventories at the end of the accounting period is not necessarily recorded at cost, but should be measured at cost and net realizable value. When the cost of inventory is higher than its net realizable value, the inventory is impaired and a provision for inventory decline should be made.

The accounting entries are: Credit: Asset impairment loss

Provision for decline in inventory value.

If there is one of the following circumstances in the inventory, it usually indicates that the net realizable value of the inventory is lower than the cost, and the provision for inventory decline should be made:1The market for this inventory **continues** and there is no prospect of a recovery in the foreseeable future; 2.

The cost of the product produced by the enterprise using the raw material is greater than the sales of the product**; 3.Due to product upgrading, the original inventory of raw materials has not met the needs of new products, and the market of raw materials is lower than its book cost; 4.The market needs change due to the obsolescence of the goods or services provided by the enterprise or the change of consumer preferences, resulting in the gradual development of the market; 5.

Other circumstances sufficient to prove that the inventory has been substantially impaired.

What is Inventory Impairment? Why should an impairment provision be made for inventories with signs of impairment?

"Inventory impairment, also known as the provision for inventory decline, refers to the part of the inventory cost that cannot be recovered due to the damage of the inventory at the end of the interim period or the end of the year, such as the inventory being damaged, the whole car inspection department or part of the obsolescence or the sales ** is lower than the cost, etc., should be withdrawn according to the difference between the cost of a single inventory item and its net realizable value, and included in the inventory decline loss. To put it simply, it is a prudent treatment of the reduced part because the net realizable value of the inventory is lower than the original cost. The provision for inventory decline is based on:

the principle of objectivity; the principle of robustness; and the principle of substance over form.