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Write Off Inventory

Inventory is stock of raw materials, work in process, and finished goods being held at a given time. Inventory is generally the least-liquid item listed by the Postal Service in the current asset account of its balance sheet. Despite investment recovery, many items remain in excess after completion of contract performance because of the nonliquid nature of inventory. Any warehouse operation, regardless of how efficiently it is managed, accumulates excess inventory, usually from errors regarding demand forecasts or record keeping. When excess inventory cannot be used for alternative purposes, it becomes obsolete.

The inventory control plan (which contains data on the quantities, locations, and conditions of inventory that is due in, on hand, and due out) is used to avoid both the overstocking and the obsolescence of inventory. Obsolete inventory does not create any value for the Postal Service because this type of inventory cannot generate revenue or create cost savings. The residual material, if not usable elsewhere in the Postal Service, is then considered obsolete and will go through the normal disposal process.


Disposal is the final phase of the life cycle and can pose significant economic and social risk to the Postal Service. The actual removal and relocation of excess inventory not addressed by investment recovery is explained in the Dispose topic of the Investment Recovery task of Process Step 6: End of Life. The Postal Service must then write off these items from the current asset account on its balance sheet.

Write Off

Write offs occur when an item has a remaining capitalized value on the Postal Service's accounting books. This is the capitalized central inventory for stocked consumables and spares, as well as the undepreciated values in the property accountability systems for equipment. Write offs for inventory items are taken against a specialized account managed by Materials Production and Distribution. Write off of the undepreciated value of equipment is paid for by the owning organization against its operating or program budget. The value in both cases is determined by the book value less any returns that can be gained through any salvage value.

The Client and Item Manager must inform the Purchase/SCM Team of inventory items that are written off so that future investment recovery plans, inventory control plans, and demand forecasts can be updated appropriately.

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