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Suppose a company does a write-down of obsolete inventory; how is this shown on the Statement of Cash Flow?

April 26, 2017Cash flow COMPANY Inventory Obsolete write-down

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Suppose a company does a write-down of obsolete inventory; how is this shown on the Statement of Cash Flow?

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Answer This is not specifically shown on the Statement of Cash Flow. Since the entry to record the write-down would have been DR Loss on inventory due to obsolescence CR Inventory there is no cash flow effect. The loss would be accommodated in the change in inventory adjustment in calculating the cash flows from operating activities.