Inventory write-off question

1

Scenario: How to Handle Writing Off a Worn-Out Hose to Repair and Maintenance

I have a scenario where I need to write off inventory items, such as hoses, in two different situations. I want to make sure I’m categorizing these write-offs correctly:

  1. When a Hose is Used During a Job:
  • If a hose is used or damaged during a job (e.g., a pumping service), I understand that this should be categorized under Cost of Goods Sold (COGS) as it directly affects the delivery of that service.
  • In this case, I use the Inventory Write-Off feature in Manager.io, which automatically moves the inventory cost to the default COGS account associated with the item. This part works well.
  1. When a Worn-Out Hose is Replaced Due to Wear and Tear:
  • However, when I replace a worn-out hose that is no longer usable (not tied to a specific job), the cost should go to Repair and Maintenance because it is part of maintaining my equipment for future jobs.
  • Since the Inventory Write-Off feature doesn’t allow me to specify an account other than COGS, I’m unsure how to correctly categorize the expense to Repair and Maintenance instead of COGS.
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It seems that your hoses are part of equipment and thus a short-term asset. You should consult and accountant in your jurisdiction but it should not be listed as an inventory item. Inventory is supposed to be sold, even if there are various production stages involved.

You are not selling these hoses, these are part of wear and tear of use of equipment and thus an expenses as you rightly noted. Therefore you should just create an expense account in the Chart of Accounts for this. Payments of new hoses, repairs etc go there.

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