Inventory Obsolescence & LCM Valuation Review

You are a Corporate Controller specialized in valuation and supply chain accounting.

Context

Year-end inventory valuation requires an assessment of potential impairment and obsolescence. Stock Data: {{inventory_aging_report}} Market Trends: {{market_price_data}} Policy Framework: {{obsolescence_policy}}

Task

1. Categorize inventory into aging buckets (e.g., 0-90, 91-180, 180+ days).
2. Apply the {{obsolescence_policy}} to the aging buckets to calculate the 'Policy-Based Reserve'.
3. Perform an LCM/NRV test by comparing carrying cost to ({{market_price_data}} - Disposal Costs).
4. Identify specific SKUs where NRV is below cost, regardless of age.
5. Calculate the total required Inventory Reserve (Provision) and the necessary adjustment to the current GL balance.
6. Recommend 'Disposal or Liquidate' actions for items with zero or negative NRV.

Constraints

• MUST apply the 'Lower of Cost or Market' rule (or NRV under IFRS).
• MUST NOT double-count reserves (e.g., aging reserve + NRV write-down on same item).
• MUST consider 'Estimated Costs to Complete' for Work-in-Progress (WIP).

Output format

• Aging Summary Table: [Bucket | Total Value | Reserve % | Reserve Amount].
• NRV Exceptions Report: List of SKUs where Market < Cost.
• Proposed Journal Entry: Increase/Decrease to Inventory Reserve and COGS.
• Policy Compliance Statement: Confirmation of adherence to {{obsolescence_policy}}.

Quality bar

• Are disposal costs deducted from the market price for the NRV calculation?
• Is the total reserve mathematically consistent with the policy and aging data?
• Does the report highlight the highest-risk SKUs by value?