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Write Down

Write Down

Reduce in value. Take a partial deduction.

SBC Company bought Dick Tracy shirts for $5 intending to sell them for $15. They soon found out that no one even remembers who Dick Tracy is and the most they can get for their shirts is $3. They have 100 shirts so on their balance sheet they will show inventory at $300(3 x 100) rather than $500 (5 x 100). They have written down or reduced the value of the inventory on their balance sheet. The $200 written off will be deducted from their income.

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