I'm looking at an Income Statement. Inventory obsolescence is $990,000 while provision for inventory obsolescence is $1,133,000. Can you explain to me why the provision is higher than the expense account?

Hi Courtney

Without looking at the financial statements, the simple answer would be that the inventory obsolescence ($990,000) is the inventory that went obsolete in the reporting year while provision for inventory obsolescence ($1,133,000) is the value of the inventory the business expects to be obsolete (from the current inventory in stock) in the coming years. Though they can be linked, they are not one and the same thing.

Hope this helps.

Hello,

Could also mean that there is 990k this financial year but there was a provision from last year of 233k

Have a look at last years balance sheet and P & L.

Thanks AJ