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Some friends may ask what is the depreciation inventory, or the relationship between the depreciation and the inventory. Actually, it’s a simple easy question.
The depreciation is a concept used for the non-current assets, that is only the non-current assets have the depreciation. Each accounting periods the depreciation as management expense offset the profit in the income statement. And the depreciation has its cycle time related to the useful life of the non-current assets. Each accounting periods the mount of the depreciation is related to the methods of calcuating depreciation.
The inventory has not the concept of the depreciation, but it has its cost matching in the current accounting period. The inventory is often related to
the purchase and sales revenue.
The matching cost of sales = Opening inventory + Purchases – closing inventory
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