Obsolete Inventory

Obsolete inventory items are items that can no longer be sold and thus their cost should not be included in the inventory balance on the balance sheet. Items may become obsolete for several reasons: technological advancement that makes the product useless, market loss, new features in newer products, or the item is used with another product that is no longer available for sale. Any inventory that becomes obsolete should be written off as a loss in the period in which it is determined to be obsolete.