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Message: <blockquote data-quote="AaronLoeb" data-source="post: 714687" data-attributes="member: 4382">Henry: It's been a while since I worked with a company that actually had an inventory of anything physical, but my recollection is that it works like this:You account for your investment in making the stuff (in this case, printing the books) and then it sits on your financial books as, essentially, potential sales. The money you spent making the books is just in limbo until you either sell the book or decide it's just not going to sell. When you decide it's just not going to sell (this is the case with any manufactured good, I think) you write off all the money you spent on making the book as a "loss." Tax-wise, losses countervail profits. Corporations are only taxed on their profits, not their income, so the lower your profits, the less you have to pay tax on. But in order to declare something a "loss" it has to be good and truly lost -- i.e. destroyed.  This leads to some famous destruction stories -- like Atari filling an entire desert landfill with Atari 2600 E.T. cartridges in the early 80s because they sold about a thousandth as many units as they'd expected.This is why you mulch books rather than holidng onto them in hopes of one day selling them (beyond the inventory costs involved) or giving them away. If you give them away, it's not a loss for some reason I truly do not understand and cannot begin to explain.Any accountants are invited to correct what I'm sure are my many errors in explaining this.AJL</blockquote>

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