It should be consolidated intra-company transaction of inventory and its depreciation reserves related when we compile a consolidated statement of account.

But, there are many problems in the course of processing asset depreciation, such as, lack of correlative data, difficult to make clear the net realizable value of stocked goods and so on.

Introduces the conditions of concrete application of accounting cautiousness principle in inventory pricing, fixed asset depreciation, business of bad debt loss and asset decrement.