How to Record Die-Bank NRV Write-downs (Unpackaged Chip Obsolescence)
Accounting for a reduction in the value of unfinished dies sitting in storage when the market price for the final product falls below production cost.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cost of Goods Sold - Inventory Write-down | Expense (+) | 25,000.00 | - |
| Inventory - Die Bank (Allowance for Obsolescence) | Asset (-) | - | 25,000.00 |
💡 Accountant's Note
Dies can sit in a 'Die Bank' for months. Under ASC 330, if the 'Net Realizable Value' (expected selling price minus packaging/shipping costs) falls below the cost of the wafer and fabrication, the asset must be written down. In semiconductors, this is often triggered by the release of a 'New Revision' or a competitor's price cut in a specific segment (e.g., memory or mobile chips).
Practitioner & Systems Framework
💻 ERP Architecture
Requires an 'Inventory Aging' report tagged by 'Node' and 'Product Family.' If dies haven't been 'called' for packaging in over 180 days, a 50% or 100% reserve is usually applied automatically by the system.
⚠️ Audit Flags
Product Roadmap alignment. Auditors cross-reference the Die Bank inventory against the 'End-of-Life' (EOL) notices sent to customers. If a chip is EOL but still carries full value in the Die Bank, it is a material misstatement risk.
📄 Required Documentation
Inventory Aging report, latest Price List (Market Data), and the 'Technical Obsolescence' memo from the product manager.
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