When creating an Inventory Adjustment for Negative Quantity, Status that can be selected is only the Default - Good.
Deducting transaction will remove quantity from the existing quantity available thus whatever the status of the existing quantity, deducted qty should acquire it too. The scenario experienced above is only due to all quantity available with attributes - Good. To select a Status other than what is currently available, change the status of the quantity first.
Transaction > Inventory > Inventory Status Change page
For example: For lost/damaged goods, change the status of the quantity first by using the Inventory Status Change page.
Change the current status to a new one.
Create an Inventory Adjustment for Negative Quantity, New Status can now be selected to the Inventory Detail Icon > Status Column