Inventory can be written down if the value is reduced. This includes the raw materials, in-progress products and finished merchandise. Items affected by a range of different scenarios — like damage, theft and shifting market trends — are all subject to an inventory write-down if their actual worth drops below the book value. It should be noted though that if a piece of inventory loses all its value as opposed to just some, it would not be eligible for a write-down. Instead, it would be treated as an inventory write-off.