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Question regarding the valuation allowance for inventory P.393 in book 3

1.How does the a company derive with the figure in that account?
2.Is it an account listed on the balance sheet?
3.When Mark down does occure, is it expensed then shifted into the account?
4.How does the process work?

Im a little confused with regards to this part of inventory, any help would be much appreciated.

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