Write-Off

Write-Off (Definition)

A write-off is a reduction in the value of an asset or earnings by the amount of an expense or loss.

Key aspects of write-offs include:

1. Used when an asset becomes worthless or uncollectible debt is deemed unrecoverable
2. Impacts both the income statement and balance sheet
3. Can include bad debts, obsolete inventory, or devalued fixed assets
4. May have tax implications, often allowing for deductions
5. Requires proper documentation and justification
6. Can significantly affect a companys financial statements
7. Understanding write-offs is important for accurate financial reporting and tax compliance

Proper management of write-offs helps maintain the integrity of financial statements and reflect the true financial position of a company.