What do you reckon, should materials be written down if they’re slow moving? The answer to this question isn’t as black and white as you may think.

When it comes to finished goods, the answer is more inclined towards “yes” since they’re first off slow moving which indicates they’re more likely to be sold lower their cost, and more so since they’re finished items from raw materials. It’s not that easy to use those goods for something else, i.e. scrap them to materials. 

However, if you think about materials, those can be used for producing various things and hence they’re market as it were is considerably larger than just those finished goods you’re producing. As such, if your finished goods aren’t selling all that good, there’s still room to sell the materials to someone else with the price you bought them provided the market price for them hasn’t dropped. If the case is so that the price is now lower, than yes, you will encounter a loss and as such, a write-down in value should be recognized, but not fully and right now.

It’s all depending on the amount you will be still using to produce your finished goods as opposed to the amount you’ll be selling to someone else. It’s also the matter of how much you’re selling your finished goods below their cost; this should also be recognized as write-down in value for the materials.