How to Account for Expired Inventory

Jonny Parker
December 27, 2023

Inventory like food, beverages, and medicine have an expiry date to ensure they remain safe for consumption. After these items expire, they can still be sold to another business (like a manufacturer) at a discounted price so that they can be used for other purposes. 

In any case, accounting for inventory that’s already expired requires that its value be reduced in one’s records, with the effects reported on financial statements. This is because the amount results in a loss that lowers the profit. 

What is expired inventory

Expired inventory, or obsolete inventory, is inventory that has reached the end of the product life cycle. This means that the inventory has neither been used nor sold for quite some time now — and will likely no longer be used or sold in the foreseeable future. 

This kind of inventory needs to be written off. 

On a broader scale, the term “inventory”