Inventory Write-Down Approval Memo Template
Writing off stock without a record is an audit finding waiting to happen. This memo template gathers the reason, item list, financial effect and approvals in one document that planners, finance and plant management can sign.
Fill in
Inventory Write-Down Approval Memo Template
Inventory Write-Down Approval Request
Company: Acme Precision Ltd Site: Plant 1 Date: 2026-10-20 Period: 2026-10 Prepared by: A. Planner, Materials Planning Requested action: Scrap
Reason and background
Items had no demand in the last 24 months after the product was discontinued. No open orders or forecast exist.
Check performed: no open sales orders, production orders or planned demand; engineering and sales confirmed no future use.
Items covered
| Item | Description | Qty | UoM | Unit cost | Book value | Expected recovery |
|---|---|---|---|---|---|---|
Financial impact
Total book value: 48,500 Expected recovery: 3,200 Charge to: Inventory write-down expense
Existing reserve covering these items: ____________ Additional charge to profit and loss: ____________
Disposal and environmental checks
Method of disposal: ____________ Hazardous or regulated material: Yes / No Export controlled or customer owned items: Yes / No (confirm before any sale or scrap) Certificate of destruction required: Yes / No
Approvals
This is a starting point, not accounting or legal advice. Follow your accounting policy and auditor guidance, which may require reserve rather than direct write-off, and remember that customer owned and export controlled items need extra approval before disposal.
Find write-down candidates
Optional: a read-only scan that lists items with no demand for review.
Optional. The tool and every export work without this. No spam.
How to use the template
Fill in the fields at the top, list each item in the table, and describe why the stock has no future use. Export to PDF or Word, attach the ERP stock and demand report, and route it for signature. After approval, post the adjustment or reserve in the ERP and record the document number on the memo.
- Attach a stock and last-movement report
- Confirm no open demand before submitting
- Record the posting document after approval
Evidence reviewers look for
Approvers want to see that the stock was checked for any remaining use: open orders, forecast, alternative parts, customer buy-back and vendor return options. They also check that recovery estimates are realistic, and that the accounting follows policy, whether that is a reserve in advance or a charge at disposal.
Accounting and control points
Under IFRS and US GAAP inventory is carried at the lower of cost and net realisable value, so the write-down is the difference between book value and realistic recovery. Separate the reserve entry, which can be reversed under IFRS in some cases, from physical disposal, which removes the item from the books. Keep serial and lot traceable items linked to quality records.
Common mistakes
Scrapping items that belong to a customer or are export controlled, writing off without checking supplier return terms, and posting adjustments without approval evidence. Another mistake is using the memo as the only control: the ERP should also restrict who can post the adjustment.
Frequently Asked Questions
Should I reserve first or write off directly?
Follow your accounting policy. Many companies reserve for excess and obsolete stock based on rules, then write off when the physical disposal happens. Direct write-off is common for confirmed scrap or damage.
Who needs to approve?
At least the planner, plant manager and controller. Add quality for traceable items and a finance director above your approval threshold. Customer owned stock needs customer agreement.
What evidence should be attached?
A stock listing with last movement date, a demand check showing no open orders or forecast, and any supplier return or buyer quotes. Photos help for damaged goods.
Can I use this for raw materials and finished goods?
Yes. Add lot or serial numbers in the table for traceable material, and note work in process items separately because their costs include labor and overhead.
Netray can build a read-only list of candidate items from ERP data, ready to attach to this memo for review.
Related Tools
Inventory Valuation Methods Reference (IFRS vs US GAAP)
A lookup table of inventory costing methods and measurement rules under IFRS and US GAAP, with the matching ERP setting where it is well known.
Developer ToolsSQL Days of Supply and Coverage Query Generator
Fill in your table and column names to produce a days of supply and below-safety-stock SQL query for any relational ERP database.
Supply Chain & InventoryInventory Planner Capability Self-Assessment
Answer ten questions to see how mature your inventory planning practice is and what to improve first.
Supply Chain & InventoryInventory Planning Parameter Governance Checklist
A checklist for keeping safety stock, reorder point, lot size and lead time parameters controlled, reviewed and traceable.
More Costing & Finance tools
See all- SAP QM Inspection Effort and Cost Calculator
- SAP Standard Cost Estimate BOM Rollup Calculator
- Legacy ERP Retirement Cost and Payback Calculator
- JD Edwards World Month-End Close Procedure Template
- Distributor Customer Credit Application Template
- Distributor Customer Profitability Worksheet
- Distributor GMROI and Inventory Turns Calculator
- Vendor Early Pay Discount Worksheet
- SyteLine Cost Rollup Variance Calculator