Inventory Reserve
An accounting entry that represents a deduction from earnings for the purpose of fairly and reasonably representing the value of inventoried assets on a balance sheet. The inventory reserve is used to make up for the fact that all inventory will not be sold at the cost to the firm.
Investopedia Commentary
An inventory reserve is a contra account on a balance sheet, and an important part of inventory accounting in GAAP.
Related Links
Inventory Valuation For Investors: FIFO And LIFO
See also: Amortization, Contra Account, Depreciation, First In, First Out - FIFO, Generally Accepted Accounting Principles - GAAP, Inventory, Last In, First Out - LIFO, Net Realizable Value - NRV