Answer to Question #227629 in Management for Sandile

Question

How could a company decide at what point stock becomes dead stock? 

Answer 1

For accounting purposes, any stored good(s) that doesn’t get sold or turn over after one year is finally considered dead stock by the company and becomes a liability. Products are never just declared unsellable within a day or night, with this in mind the question at which point do we declare products in storage to be dead stock comes to mind. It is a process that takes time. At the beginning of the process stored products might be deemed as slow-moving inventory. If after a period of time they are still not sold, they become excess inventory and eventually are categorized as dead stock.