Accounting Treatment Of Inventory Losses Caused By Natural Wastage

According to the current general practice, the inventory with profit and loss and damage will be pferred to the subject of "loss of property to be treated" according to the cost (planned cost or actual cost) before approval.

Among them, the internal consumption caused by natural losses is approved to be converted into management fees, however, I believe.

It seems that the loss of inventory losses caused by natural losses is not appropriate.

Because: 1. is not consistent with the objectivity principle.

Management expenses refer to all kinds of expenses that an enterprise's administrative department produces for organizing and managing production and operation activities.

It is obvious that the loss due to natural loss in inventory is not controlled by the organization and management of the enterprise's administrative departments, but the responsibility of the administrative department is not very objective.

2. does not match the matching principle.

The natural loss of raw materials and other inventories is the same nature as the reasonable loss of material purchase, so the actual cost of issuing inventory and final inventory should be adjusted.

If it is converted into management fees, the manufacturing cost of the material produced will be reduced, so that the sales revenue of the product can not be matched with the sales of its products.

3. is not convenient for performance appraisal of responsibility centers.

Natural loss leads to different accounting treatments of inventory losses, which will result in different standards and cost centers, because the natural wastage of unit inventories is basically fixed in a certain period. Therefore, the natural wastage of an inventory during an accounting period is closely related to the inventory of raw materials and finished products.

The adjustment of the natural loss of such inventories in the actual cost of units issuing inventory and final inventory (that is, the inclusion of standard cost centers) is more conducive to the rational assessment of the performance of the responsibility center than the conversion of management fees into the cost center.

Based on the above reasons, I believe that the inventory losses caused by natural losses should be pferred to the subject of "property damage to be treated" before the approval is made.

After the approval is approved, the cost of issuing inventory or ending inventory is increased, that is, the items of "production cost" and "raw material" are debited, and the subject of "loss of property to be treated" is credited.