The inventory committee determines the physical inventory values by applying the prudence principle meaning that the allowances, depreciation, or impairment will adjust these values. If the inventory value is higher than the asset value recognized in the accounting books, the inventory committee will highlight these assets at that value already recognized in accounting. Otherwise, the assets will be highlighted in the inventory lists at the inventory value.

Accounting impact

Identifying the depreciation/impairment adjustment

The inventory commission proposes to provide for impairment of the depreciated or impaired assets identified during the inventory process or book the extra amount of depreciation, supported by the explanations related to the factors, which caused the depreciation and impairment.

Identifying the surpluses on the inventory management

Identifying the minuses of inventory management

Compensations between the identified pluses and minuses of inventory management

When determining the value of the deficiencies, assuming that the inventory management deficiencies are not considered fraud, the possibility of compensating them with the identified surpluses is considered, if the following conditions are met:

Compensation is not allowed if it is proved that the identified shortage in the inventory is the result of the theft or goods degradation, or due to the responsible persons’ fault in charge of the inventory management, respectively.

Fiscal impact

Impact on the profit tax

Expenses related to missing from inventory management or obsolete stocks or depreciable fixed assets, non-attributable, are not deductible, except in the following situations:

depreciable fixed assets/assets destroyed because of natural calamities or other causes of force majeure, under the statutory ruled conditions.

the depreciable fixed assets/assets non-ensured.

the impaired depreciable assets/fixed assets degraded in quality if proof of impairment is provided. This condition is considered fulfilled both, either when the destruction is carried out by own means, or if the stocks or depreciable fixed assets are handed over to specialized units.

Adjustment of VAT deduction right

The missing goods from the inventory management are not recognized as goods delivery.

If the missing assets are imputable, the imputed amounts do not represent the counter value of the operations within the VAT scope, regardless of whether these assets fall or not under the mandatory tax adjustment according to Art 304 Fiscal Code. The imputation is done at the replacement value.