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80 units with nothing left to recover
You still hold 80 units that cost 12.50 each. The bona fide selling price is 0, and the cost to dispose of them is 0. The regulation defines that selling price as an actual offering during a period ending no later than 30 days after the inventory date. The 80 and the 12.50 are an example.
Unsold units: 25% lower
Change unsold units to 60 units while keeping the other example values the same.
Unsold units: 25% higher
Change unsold units to 100 units while keeping the other example values the same.
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Quick answer
What does the Dead stock write-off calculate?
What does unsold stock cost to write off? This calculator uses unsold units, unit cost, bona fide selling price, and disposition cost per unit to estimate cost minus what the units can still bring immediately in your browser.
With the values currently entered, the result is $1,000.00 — cost written off. It also shows cost of the units, value kept, and net realizable value per unit.
How to use the Dead stock write-off
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Unsold units — entered in units
- Unit cost
- Bona fide selling price
- Disposition cost per unit
Dead stock write-off formula
Write-off = units × unit cost - value kept. Value kept is the lower of that cost and units × the greater of zero and (selling price - disposition cost).
Assumptions
- Treasury Regulation 26 CFR 1.471-2(c) says goods unsalable at normal prices, or unusable in the normal way because of damage, imperfections, shop wear, changes of style, odd or broken lots, or similar causes, are valued at a bona fide selling price less the direct cost of disposition. A bona fide selling price means an actual offering during a period ending no later than 30 days after the inventory date. IRS Publication 538 states the same rule.
- FASB ASU 2015-11 measures inventory at the lower of cost and net realizable value when the method is not LIFO or the retail inventory method. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The loss is recognized in the period it occurs. This page will not value the units below zero, and it will not write them up above cost.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Goods unsalable at normal prices, or unusable in the normal way because of damage, imperfections, shop wear, changes of style, odd or broken lots, or similar causes, are valued at a bona fide selling price less the direct cost of disposition. A bona fide selling price means an actual offering during a period ending no later than 30 days after the inventory date.
Goods that cannot be soldUS Internal Revenue Service — Publication 538Scope: US accounting methods; the inventory rule is the one in Regulation 1.471-2(c)Values goods you cannot sell at normal prices at their bona fide selling price minus the direct cost of disposition, whichever method you use for the rest of the inventory. Raw materials and partly finished goods are not valued below scrap value.
ASU 2015-11, Inventory measured at the lower of cost and net realizable valueFinancial Accounting Standards BoardScope: US GAAP inventory, other than LIFO and the retail inventory methodMeasures that inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The loss is recognized in the period it occurs.
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Dead stock write-off example and edge cases
A dead-stock write-off is the cost of units you will not sell at a normal price, minus anything you can still get for them. Treasury Regulation 1.471-2(c) values those goods at a bona fide selling price less the direct cost of disposition. When that value is zero, the write-off is the units times the unit cost.
Example: 80 units with nothing left to recover
You still hold 80 units that cost 12.50 each. The bona fide selling price is 0, and the cost to dispose of them is 0. The regulation defines that selling price as an actual offering during a period ending no later than 30 days after the inventory date. The 80 and the 12.50 are an example.
- Unsold units
- 80 units
- Unit cost
- 12.5
- Bona fide selling price
- 0
- Disposition cost per unit
- 0
Calculated result$1,000.00cost written off
The units cost 1,000. With a selling price of 0, the value left is 0, so the write-off is 1,000. A selling price of 4 and a 1 disposition cost would leave 3 a unit, and the write-off would fall to 760.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the 1,000 first. It is 80 times 12.50. The value kept is the lower of that cost and the selling price minus disposition cost. Both are 0 here, so nothing stays on the books for these units.
- IRS Publication 538 tells you to use the bona fide selling price minus direct cost of disposition, whichever method you use for the rest of the inventory. The goods have to fit the regulation’s list, including damage, shop wear, changes of style, or odd or broken lots. A lower ending inventory raises cost of goods sold.
Edge cases worth checking
The goods are still offered at the normal price
Regulation 1.471-2(c) is for goods unsalable at normal prices or unusable in the normal way. Stock that is only slow, and still offered at the normal price, stays at cost. A 0 in the selling-price box is for goods you will not sell.
Scrap is worth less than the haul-away cost
Put the scrap price in the selling-price box and the haul-away cost in the disposition box. The page will not value the goods below zero. If haul-away is 6 and scrap is 4, net realizable value is 0 and the write-off stays at the full 1,000 on this example.
What changes the result most
Unsold units
Use the count you expect in real life. Round up when a partial units cannot be purchased or used.
Unit cost
Use a current amount for unit cost. Include fees or recurring costs that belong in the same figure.
Bona fide selling price
Use a current amount for bona fide selling price. Include fees or recurring costs that belong in the same figure.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Unsold units: 25% lower
60 units$750.00cost written off
Unsold units: 25% higher
100 units$1,250.00cost written off
Unit cost: 25% higher
15.625$1,250.00cost written off
Common mistakes
Check unsold units
Treasury Regulation 26 CFR 1.471-2(c) says goods unsalable at normal prices, or unusable in the normal way because of damage, imperfections, shop wear, changes of style, odd or broken lots, or similar causes, are valued at a bona fide selling price less the direct cost of disposition. A bona fide selling price means an actual offering during a period ending no later than 30 days after the inventory date. IRS Publication 538 states the same rule. Make sure this matches the number you enter.
Keep disposition cost per unit consistent
FASB ASU 2015-11 measures inventory at the lower of cost and net realizable value when the method is not LIFO or the retail inventory method. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The loss is recognized in the period it occurs. This page will not value the units below zero, and it will not write them up above cost. Use the same units and time period throughout the calculation.
Do not rely on one dead stock write-off scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
What does unsold stock cost to write off?
It does not replace a quote, contract, accountant, or local employment guidance.