Inventory accounting a comprehensive guide phần 7 ppt

Although the costs incurred by a production process upto the split-off point cannot be clearly assigned to a single product, it is still sary to find some reasonable allocation method fo

Because there are accounting and legal reasons for doing so Generally acceptedaccounting principles (GAAP) require that costs be assigned to products for inven-tory valuation purposes Although the costs incurred by a production process up

to the split-off point cannot be clearly assigned to a single product, it is still sary to find some reasonable allocation method for doing so, in order to obey theaccounting rules Otherwise, all costs incurred up to the split-off point could rea-sonably be charged off directly to the cost of goods sold as an overhead cost, whichwould result in enormous overhead costs and few direct costs (only those incurredafter the split-off point)

neces-The logic used for allocating costs to joint products and by-products has less to

do with some scientifically derived allocation method and more with finding a quickand easy way to allocate costs that is reasonably defensible (as we will see in thenext section) The reason for using simple methodologies is that the promulgators

of GAAP realize there is no real management use for allocated joint costs—theycannot be used for determining break-even points, setting optimal prices, or figur-ing out the exact profitability of individual products Instead, they are used for any

of the following purposes, which are more administrative in nature:

Inventory valuation It is possible to manipulate inventory levels (and therefore

the reported level of income) by shifting joint cost allocations toward those ucts that are stored in inventory This practice is obviously discouraged, because

prod-it results in changes to income that have no relationship to operating condprod-itions.Nonetheless, one should be on the lookout for the deliberate use of allocationmethods that will alter the valuation of inventory

Income reporting Many organizations split their income statements into

sub-levels that report on profits by product line or even individual product If so,joint costs may make up such a large proportion of total production costs thatthese income statements will not include the majority of production costs, un-less they are allocated to specific products or product lines

Transfer pricing A company can alter the prices at which it sells products

among its various divisions, so that high prices are charged to those divisionslocated in high-tax areas, resulting in lower reported levels of income tax againstwhich those high tax rates can be applied A canny inventory accounting staffwill choose the joint cost allocation technique that results in the highest jointcosts being assigned to products being sent to such locations (and the reversefor low-tax regions)

Bonus calculations Manager bonuses may depend on the level of reported

prof-its for specific products, which in turn are partly based on the level of joint costsallocated to them Thus, managers have a keen interest in the calculations used toassign costs, especially if some of the joint costs can be dumped onto productsthat are the responsibility of a different manager

Cost-plus contract calculations Many government contracts are based on the

reimbursement of a company’s costs, plus some predetermined margin In thissituation, it is in a company’s best interests to ensure that the largest possible

Joint and By-Product Costing / 143

proportion of joint costs are assigned to any jobs that will be reimbursed by thecustomer, while the customer will be equally interested, but because of a desire

to reduce the allocation of joint costs.

Insurance reimbursement If a company suffers damage to its production or

inventory areas, some finished goods or work-in-process inventory may havebeen damaged or destroyed If so, it is in the interests of the company to fullyallocate as many joint costs as possible to the damaged or destroyed stock, so that

it can receive the largest possible reimbursement from its insurance provider.Next, we will look at the two most commonly used methods for allocating jointcosts to products, which are based on product revenues for one method and grossmargins for the other

10-4 Cost Allocation Methodologies

Although several cost allocation methodologies have been proposed in the ing literature, only two methods have gained widespread acceptance The first isbased on the sales value of all joint products at the split-off point To calculate it,the inventory accountant compiles all costs accumulated in the production process

account-up to the split-off point, determines the eventual sales value of all products created

at the split-off point, and then assigns these costs to the products based on their ative values If there are by-products associated with the joint production process,they are considered to be too insignificant to be worthy of any cost assignment, al-though revenues gained from their sale can be charged against the cost of goodssold for the joint products This is the simplest joint cost allocation method, and it

rel-is particularly attractive, because the inventory accountant needs no knowledge ofany production processing steps that occur after the split-off point

This different treatment of the costs and revenues associated with by-productscan lead to profitability anomalies at the product level The trouble is that the deter-mination of whether a product is a by-product or not can be subjective; in one com-pany, if a joint product’s revenues are less than 10% of the total revenues earned,then it is a by-product, whereas another company might use a 1% cutoff figure in-stead Because of this vagueness in accounting terminology, one company may as-sign all of its costs to just those joint products with an inordinate share of totalrevenues, and record the value of all other products as zero If a large quantity ofthese by-products were to be held in stock at a value of zero, the total inventory val-uation would be lower than another company would calculate, simply because oftheir definition of what constitutes a by-product

A second problem with the treatment of by-products under this cost allocationscenario is that by-products may only be sold off in batches, which may only occuronce every few months This can cause sudden drops in the cost of joint products

in the months when sales occur, because these revenues will be subtracted from theircost Alternately, joint product costs will appear to be too high in those periodswhen there are no by-product sales Thus, one can alter product costs through thetiming of by-product sales

144 / Inventory Accounting

A third problem related to by-products is that the revenues realized from theirsale can vary considerably, based on market demand If so, these altered revenueswill cause abrupt changes in the cost of those joint products against which theserevenues are netted It certainly may require some explaining by the inventory ac-countant to show why changes in the price of an unrelated product caused a change

in the cost of a joint product! This can be a difficult concept for a nonaccountant

to understand

The best way to avoid the three issues just noted is to avoid the designation of

any product as a by-product Instead, every joint product should be assigned some

proportion of total costs incurred up to the split-off point, based on their total tential revenues (however small they may be), and no resulting revenues should beused to offset other product costs By avoiding the segregation of joint productsinto different product categories, we can avoid a variety of costing anomalies.The second allocation method is based on the estimated final gross margin ofeach joint product produced The calculation of gross margin is based on the revenuethat each product will earn at the end of the entire production process, less the cost

po-of all processing costs incurred from the split-po-off point to the point po-of sale This is

a more complicated approach, because it requires the inventory accountant to cumulate additional costs through the end of the production process, which in turnrequires a reasonable knowledge of how the production process works and wherecosts are incurred Although it is a more difficult method to calculate, its use may

ac-be mandatory in those instances where the final sale price of one or more jointproducts cannot be determined at the split-off point (as is required for the first al-location method), thereby rendering the other allocation method useless

The main problem with allocating joint costs based on the estimated final gross

margin is that it can be difficult to calculate if there is a great deal of customized

work left between the split-off point and the point of sale If so, it is impossible todetermine in advance the exact costs that will be incurred during the remainingproduction process In such a case, the only alternative is to make estimates ofexpected costs that will be incurred, base the gross margin calculations on this in-formation, and accept the fact that the resulting joint cost allocations may not beprovable, based on the actual costs incurred

The two allocation methods described here are easier to understand with an ample, which is shown in Exhibit 10-2 In the exhibit, we see that $250 in joint costshave been incurred up to the split-off point The first allocation method, based onthe eventual sale price of the resulting joint products, is shown beneath the split-offpoint In it, the sale price of the by-product is ignored, leaving a revenue split of 59%and 49% between products A and B, respectively The joint costs of the process areallocated between the two products based on this percentage

ex-The second allocation method, based on the eventual gross margins earned byeach of the products, is shown to the right of the split-off point This calculationincludes the gross margin on sale of product C, which was categorized as a by-product, and therefore ignored, in the preceding calculation This calculationresults in a substantially different sharing of joint costs between the various prod-ucts than we saw for the first allocation method, with the split now being 39%,

Joint and By-Product Costing / 145

Split-off Point

58%, and 3% between products A, B, and C, respectively The wide swing in located amounts between the two methods can be attributed to the different bases

al-of allocation: the first is based on revenue, whereas the second is based on grossmargins

10-5 Pricing of Joint Products and By-products

The key operational issue for which joint cost allocations should be devoutly nored is in the pricing of joint products and by-products The issue here is that theallocation used to assign a cost to a particular product does not really have anybearing on the actual cost incurred to create the product—either method for split-ting costs between multiple products, as noted in the last section, cannot really beproven to allocate the correct cost to any product Instead, we must realize that allcosts incurred up to the split-off point are sunk costs that will be incurred, no matterwhat combination of products are created and sold from the split-off point forward.Because everything before the split-off point is considered to be a sunk cost,

ig-pricing decisions are only concerned with those costs incurred after the split-off

point, because these costs can be directly traced to individual products In otherwords, incremental changes in prices should be based on the incremental increases

in costs that accrue to a product after the split-off point This can result in costs beingassigned to products that are inordinately low, because there may be so few costsincurred after the split-off point This can be in response to competitive pressures

or because it only seems necessary to add a modest markup percentage to the mental costs incurred after the split-off point If these prices are too low, then therevenues resulting from the entire production process may not be sufficiently highfor the company to earn a profit

incre-The best way to ensure that pricing is sufficient for a company to earn a profit

is to create a pricing model for each product line This model, as shown in Exhibit10-3, itemizes the types of products and their likely selling points, as well as thevariable costs that can be assigned to them subsequent to the split-off point Thusfar, the exhibit results in a total gross margin that is earned from all joint and by-product sales Then we add up the grand total of all sunk costs that were incurredbefore the split-off point and subtract this amount from the total gross margin Ifthe resulting profit is too small, then the person setting prices will realize that indi-vidual product prices must be altered in order to improve the profitability of theentire cluster of products Also, by bringing together all of the sales volumes andprice points related to a single production process, one can easily see where pricingmust be adjusted in order to obtain the desired level of profits In the example, wemust somehow increase the total profit by $3.68 in order to avoid a loss A quickperusal of the exhibit shows us that two of the products—the viscera and pituitarygland—do not generate a sufficient amount of throughput to cover this loss Ac-cordingly, the sales staff should concentrate the bulk of its attention on the repric-ing of the other three listed products, in order to eliminate the operating loss.This format can be easily adapted for use for entire reporting periods or pro-duction runs, rather than for a single unit of production (as was the case in the last

Joint and By-Product Costing / 147

exhibit) To do so, we simply multiply the number of units of joint products or

by-products per unit by the total number of units to be manufactured during the period,

and enter the totals in the far right column of the same format just used in Exhibit

10-3 The advantage of using this more comprehensive approach is that a production

scheduler can determine which products should be included in a production run

(assuming that more than one product is available) in order to generate the largest

possible throughput

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Exhibit 10-3 Pricing Model for Joint and By-product Pricing

Product Incremental Throughput/ Total Name Price/ Unit Cost/ Unit Unit No of Sales Units Throughput

we review how to find obsolete inventory, how to dispose of it in the most profitablemanner, how much expense to recognize, and how to prevent it from occurring.

11-2 Locating Obsolete Inventory

There are several techniques for locating obsolete inventory, as discussed in thissection However, be sure to gain the commitment of upper management to thissearch first; otherwise, the scope of the resulting expense (which can be substantial)may lead to multiple rounds of questions regarding how the company could havefound itself saddled with so much obsolete inventory, all of which must be writtenoff as soon as it is discovered Conducting a search for obsolete inventory may meetwith a particular level of resistance if the management team is being awarded sig-nificant profit-based bonuses If so, consider addressing the prevention of incom-ing obsolete inventory instead, which may reduce inventory levels over the longterm, although it will not address the existing obsolete inventory

It is certainly encouraging to see a manager eliminate obsolete inventory, but acommon problem is to see some items disposed of that were actually needed, possi-bly for short-term production requirements, but also for long-term service parts orsubstitutes for other items In these cases, the person eliminating inventory willlikely be castigated for causing problems that the logistics staff must fix A goodsolution is to form a Materials Review Board (MRB) The MRB is composed of rep-resentatives from every department having any interaction with inventory issues—

accounting, engineering, logistics, and production For example, the engineeringstaff may need to retain some items that they are planning to incorporate into a newdesign, while the logistics staff may know that it is impossible to obtain a rare part,and so prefer to hold onto the few items left in stock for service parts use.

It can be difficult to bring this disparate group together for obsolete inventoryreviews, so one normally has to put a senior member of management in charge toforce meetings to occur, while also scheduling a series of regular inventory reviewmeetings well in advance Meeting minutes should be written and disseminated toall group members, identifying which inventory items have been mutually declaredobsolete If this approach still results in accusations that items have been improp-erly disposed of, then the group can also resort to a sign-off form that must becompleted by each MRB member before any disposition can occur However, ob-taining a series of sign-offs can easily cause lengthy delays or the loss of the sign-off form, and is therefore not recommended A simpler approach is to use a negativeapproval process whereby items will be dispositioned as of a certain date unless anMRB member objects The MRB is not recommended for low-inventory situations,

as can arise in a just-in-time (JIT) environment, because an MRB tends to act tooslowly for employees who are used to a fast-moving JIT system

The simplest long-term way to find obsolete inventory without the assistance of

a computer system is to leave the physical inventory count tags on all inventoryitems following completion of the annual physical count The tags taped to anyitems used during the subsequent year will be thrown away at the time of use, leav-ing only the oldest unused items still tagged by the end of the year One can thentour the warehouse and discuss with the MRB each of these items to see if an obso-lescence reserve should be created for them However, tags can fall off or be rippedoff inventory items, especially if there is a high level of traffic in nearby bins Extrataping will reduce this issue, but it is likely that some tag loss will occur over time.Even a rudimentary computerized inventory tracking system is likely to recordthe last date on which a specific part number was removed from the warehouse forproduction or sale If so, it is an easy matter to use a report writer to extract andsort this information, resulting in a report listing all inventory, starting with thoseproducts with the oldest “last used” date By sorting the report with the oldest last-usage date listed first, one can readily arrive at a sort list of items requiring furtherinvestigation for potential obsolescence However, this approach does not yieldsufficient proof that an item will never be used again, because it may be an essen-tial component of an item that has not been scheduled for production in some time,

or a service part for which demand is low

A more advanced version of the last used report is shown in Exhibit 11-1 Itcompares total inventory withdrawals to the amount on hand, which by itself may

be sufficient information to conduct an obsolescence review It also lists plannedusage, which calls for information from a material requirements planning systemand which informs one of any upcoming requirements that might keep the MRBfrom otherwise disposing of an inventory item An extended cost for each item isalso listed, in order to give report users some idea of the write-off that might occur

if an item is declared obsolete In the exhibit, the subwoofer, speaker bracket, and

150 / Inventory Accounting

wall bracket appear to be obsolete based on prior usage, but the planned use ofmore wall brackets would keep that item from being disposed of.

If a computer system includes a bill of materials, there is a strong likelihoodthat it also generates a “where used” report, listing all of the bills of material forwhich an inventory item is used If there is no “where used” listed on the report for

an item, it is likely that a part is no longer needed This report is most effective ifbills of material are removed from the computer system or deactivated as soon asproducts are withdrawn from the market; this approach more clearly reveals thoseinventory items that are no longer needed

An additional approach for determining whether a part is obsolete is reviewingengineering change orders These documents show those parts being replaced bydifferent ones, as well as when the changeover is scheduled to take place One canthen search the inventory database to see how many of the parts being replaced arestill in stock, which can then be totaled, yielding another variation on the amount

of obsolete inventory on hand

A final source of information is the preceding period’s obsolete inventory port Even the best MRB will sometimes fail to dispose of acknowledged obsoleteitems The accounting staff should keep track of these items and continue to no-tify management of those items for which there is no disposition activity

re-In order to make any of these review systems work, it is necessary to createpolicies and procedures as well as ongoing scheduled review dates By doing so,there is a strong likelihood that obsolescence reviews will become a regular part

of a company’s activities In particular, consider a Board-mandated policy to duct at least quarterly obsolescence reviews, which gives management an oppor-tunity to locate items before they become too old to be disposed of at a reasonableprice Another Board policy should state that management will actively seek out anddispose of work-in-process or finished goods with an unacceptable quality level

con-By doing so, goods are kept from being stored in the warehouse in the first place,

so the MRB never has to deal with it at a later date

Obsolete Inventory / 151

Exhibit 11-1 Inventory Obsolescence Review Report

Last Item Quantity Year Planned Extended Description No Location on Hand Usage Usage Cost

11-3 Disposing of Obsolete Inventory

As soon as obsolete inventory is identified, GAAP mandates that it be written off atonce However, this only applies to the unrecoverable portion of the inventory, soone should make a strong effort to earn some compensation from an inventory dis-position This section outlines several disposition possibilities, beginning with full-price sales and moving down through options having progressively lower returns

In some situations, one can recover nearly the entire cost of excess items by ing the service department to sell them to existing customers as replacement parts.This approach is especially useful when the excess items are for specialized partsthat customers are unlikely to obtain elsewhere, because these sales can be pre-sented to customers as valuable replacements that may not be available for muchlonger Conversely, this approach is least useful for commodity items or those sub-ject to rapid obsolescence or having a short shelf life

ask-It is possible that some parts should be kept on hand for a few years, to be sold

or given away as warranty replacements This will reduce the amount of cence expense and also keeps the company from having to procure or remanufac-ture parts at a later date in order to meet service/repair obligations The amount ofinventory to be held in this service/repair category can be roughly calculated based

obsoles-on the company’s experience with similar products, or with the current product if

it has been sold for a sufficiently long period Any additional inventory on handexceeding the total amount of anticipated service/repair parts can then be disposed

of Of particular interest is the time period over which management anticipates ing parts in the service/repair category There should be some period over which thecompany has historically found that parts are required, such as five or ten years.Once this predetermined period has ended, a flag in the product master file shouldtrigger a message indicating that the remaining parts can be eliminated Beforedoing so, management should review recent transactional experience to see if theservice/repair period should be extended or if it is now safe to eliminate the re-maining stock

stor-Another possibility is to return the goods to the original supplier Doing so willlikely result in a restocking fee of 15% to 20%, which is still a bargain for otherwiseuseless goods Rather than buying back parts for cash, many suppliers will only issue

a credit against future purchases This option becomes less likely if the company hasowned the goods for a long time, because the supplier may no longer have a need forthem stock them at all Of course, this approach fails if the supplier will only issue

a credit and the company has no need for other parts sold by the supplier

It may be possible to sell goods online through an auction service The known site is eBay, although there are other sites designed exclusively for thedisposition of excess goods, such as www.salvagesale.com These sites are moreproactive in maintaining contact with potential buyers within specific commoditycategories, and so can sometimes generate higher resale prices

best-A poor way to sell off excess inventory to salvage contractors is to allow them

to pick over the items for sale, only selecting those items they are certain to make

152 / Inventory Accounting

a profit on By doing so, the bulk of the excess inventory will still be parked in thewarehouse when the contractors are gone Instead, divide the inventory intobatches, each one containing some items of value, which a salvage contractor mustpurchase in total in order to obtain that subset of items desired Then have the con-tractors bid on each batch Although the total amount of funds realized may not bemuch higher than would have been the case if the contractors had cherry-picked theinventory, they will take on the burden of removing the inventory from the ware-house, thereby allowing the company to avoid disposal expenses.

There are some instances where a company can donate excess inventory to acharity By doing so, it can claim a tax deduction for the book value of the donateditems This will not generate any cash flow if the company has no reportable in-come, but the deduction can contribute to a net operating loss carry-forward thatcan be carried into a different tax reporting year If this approach looks viable, re-quest a copy of nonprofit status from the receiving entity, proving that it has beengranted nonprofit status under section 501(c)(3) of the Internal Revenue Servicetax code

Finally, even if there is no hope of obtaining any form of compensation for solete goods, strongly consider throwing them in the dumpster By doing so, therewill be more storage space in the warehouse, the space to be allocated to other uses.Furthermore, the amount of inventory insurance coverage will be less, resulting in

ob-a smob-aller ob-annuob-al insurob-ance premium Depending on the locob-al tob-ax jurisdiction, onecan also avoid paying a property tax on the inventory that has been disposed of Inaddition, the number of inventory items to track in the warehouse database can bereduced, which can lead to a reduction in the number of cycle counting hours re-quired per day to review the entire inventory on a recurring basis

11-4 Expense Recognition for Obsolete Inventory

In brief, the proper expense recognition procedure for obsolete inventory is to termine the most likely disposition value for the targeted items, subtract this valuefrom the book value of the obsolete inventory, and set aside the difference as a re-serve As the obsolete inventory is actually disposed of or estimates in the dispo-sition values change, adjust the reserve account to reflect these alterations.For example, a review of the Presto Computer Company’s inventory revealsthat it has $100,000 of laptop computer hard drives that it cannot sell However, itbelieves there is a market for the drives through a reseller in Africa, but only at a saleprice of $20,000 Accordingly, the Presto controller recognizes a reserve of $80,000with the following journal entry:

de-Debit Credit

Obsolete Inventory / 153

After finalizing arrangements with the African reseller, the actual sale price is only

$19,000, so the controller completes the transaction with the following entry, ognizing an additional $1,000 of expense:

rec-Debit Credit

Sounds like a simple, mechanical process, doesn’t it? It is not The first problem

is that one can improperly alter a company’s reported financial results just by ing the timing of actual dispositions For example, if a manager knows he can re-ceive a higher-than-estimated price when selling old inventory, he can accelerate ordelay the sale in order to drop some gains into a reporting period where the extra re-sults are needed This is unlikely to be a significant problem if the reserve is small,but it is a substantial risk if the reverse is the case For example, the Presto ComputerCompany has set aside an obsolescence reserve of $25,000 for laptop computerfans However, in January, the purchasing manager knows that the resale price forfans has plummeted, so the real reserve should be closer to $35,000, which wouldcall for the immediate recognition of an additional $10,000 of expense However,because this would result in an overall loss in Presto’s financial results in January,

alter-he waits until April, walter-hen Presto has a profitable month, and completes talter-he sale atthat time, thereby delaying the additional obsolescence loss until the point of sale

A second problem is the reluctance of management to suddenly drop a largeexpense reserve into the financial statements, which may disturb outside investorsand creditors Managers have a tendency instead to recognize small incrementalamounts, thereby making it look as though obsolescence is a minor problem.There is no ready solution to this problem, because GAAP clearly mandates thatall obsolete inventory be written off at once It is a rare accountant who does notenter into a battle with management over this issue at some point during his or hercareer

A third problem is the shear size of an expense recognition if there has been along time period between obsolescence reviews A review usually occurs at the end

of the fiscal year, when this type of inventory is supposed to be investigated andwritten off, usually in conjunction with the auditor’s review or the physical inven-tory count (or both) If this write-off has not occurred in previous years, the cumu-lative amount can be startling, which can result in the departure of the materialsmanager and/or the controller on the grounds that they should have known aboutthe problem There are three ways to keep a large write-off from occurring First,conduct frequent obsolescence reviews to keep large write-offs from building up.Second, create an obsolescence expense reserve as part of the annual budget, andencourage the MRB to use it all Under this approach, one can usually count on thewarehouse manager to throw out the maximum possible amount of stock on the first

154 / Inventory Accounting

day when the new budget takes effect Third, implement some of the approachesdescribed in the next section to prevent inventory from becoming obsolete.

A final expense recognition issue is that senior management simply may not lieve the MRB when they arrive at an extremely high obsolescence reserve, andmanagement may reject the recommended expense recognition Their presumedknowledge of the business will not allow them to consider that a large part of theinventory is no longer usable If this is the case, consider bringing in consultants

be-to conduct an independent evaluation of the invenbe-tory Senior managers may needthis second opinion before they will authorize a large obsolescence reserve

11-5 Preventing Obsolete Inventory

Thus far, we have only reviewed a variety of ways to locate, dispose of, and accountfor obsolete inventory The real trick is to avoid all of those topics by ensuring thatthere is no obsolete inventory to begin with This section addresses several ways toachieve this goal

A major source of obsolete inventory is excessive purchasing volumes Thepurchasing department may be purchasing in large quantities in order to save itselfthe trouble of issuing a multitude of purchase orders for smaller quantities, or be-cause it can obtain lower prices by purchasing in large volumes This problem can

be avoided through the use of just-in-time purchasing practices, purchasing onlythose items authorized by a material requirements planning system, or by settinghigh inventory turnover goals for the materials management department

A well run purchasing department will use bills of material to determine theparts needed to build a product and then order them in the quantities specified in thebills However, if a bill of material is incorrect, then the items purchased will either

be the wrong ones or the correct ones but in the wrong quantities To avoid thisproblem, the bill of materials should be audited regularly for accuracy An addi-tional way to repair bills of material is to investigate why some kitted items are re-turned unused to the warehouse or additional items are requested by the productionstaff These added transactions usually indicate incorrect bills of material

It is easy for a part to become obsolete if no one knows where it is If it is buried

in an odd corner of the warehouse, there is not much chance that it will be used up

To avoid this problem, there should be location codes in the inventory database forevery part, along with continual cycle counting to ensure that locations are correct

A periodic audit of location codes will give management a clear view of the racy of this information

accu-When the marketing department investigates the possibility of withdrawing aproduct from sale, it often does so without determining how much inventory of boththe finished product and its component parts remain on hand At most, the market-ing staff only concerns itself with clearing out excess finished goods, because thiscan be readily identified Those unique parts that are only used in the manufacture

of a withdrawn product will then be left to gather dust in the warehouse and willeventually be sold off as scrap only after a substantial amount of time has passed

Obsolete Inventory / 155