Inventory write-down Due to increased competition, assume a wine producer has to write down its premium red wines by $40 million. In a stock count it also finds many cases of white wine (valued at $3...

Inventory write-down Due to increased competition, assume a wine producer has to write down its premium red wines by $40 million. In a stock count it also finds many cases of white wine (valued at $3 million) which are past their use-by date and needs to destroy this wine. 1 What would be the journal entry for the write-downs? 2 Why would a write-down in inventory lead to a possible decline in share price?