The cost of old merchandise?

Question

Does the cost of old merchandise depreciate? Can I change the cost of merchandise from a finance standpoint to lower the total cost of merchandise in inventory?

Answer 1

Inventory is never depreciated. You state inventory at the lower of cost and net realisable value. If your book balance is $4,500 and because they're old, you can only sell them for $3,000, you reduce the value to $3,000 by taking $1,500 to COGS.