write off


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Write-Off

A reduction in an individual's or a company's income as the result of an expense. For example, an unpayable credit sale may be a write-off for the creditor, especially if the debtor declares bankruptcy. The bankruptcy means that the debtor is unable to pay the debt, which results in a loss of income for the creditor. A write-off may usually be deducted from one's taxable income.

write off

To reduce the balance (that is, the book value of an asset or a group of assets) in an account to zero by recognizing the recorded value as an expense. For example, a firm may write off a technologically obsolete asset shown on its balance sheet as having monetary value. The asset will then be deleted from the balance sheet, and income during the period will be reduced (or losses will be increased) by an equivalent amount. Also called charge off.
Case Study In September 2001 Blockbuster, Inc., announced it would write off $450 million in the value of its videotape inventory. Tapes that, depending on age, had each been carried at a value of $4 to $8 would be valued at $2 under the new policy. In addition, Blockbuster said it would reduce the number of old tapes in each store from 8,000 to 6,000, thereby eliminating a quarter of its inventory of older tapes. More profitable DVD rentals had become an increasing part of Blockbuster's business, and the firm decided to devote more shelf space to these items. The charge, taken against second-half earnings, caused Blockbuster to report a large loss when Wall Street analysts had been expecting positive earnings. The unexpected news caused the firm's common stock to fall in price by over 8% on the day of the announcement.

write off

(accounting) to charge a cost item as an expense in computing a firm's profit or loss. Certain cost items which are fixed assets but which are of insignificant value may still be written off and charged as an expense in their year of purchase.
References in periodicals archive ?
The authors' research indicates that when SFAS 142 (ASC 350-20) changed the way goodwill declined in value from amortization to impairment, some companies seized the opportunity to write off large amounts of goodwill shortly after an acquisition.
The total direct write offs by banks in Japan amounted to 11.
As a homeowner, he'll still be able to write off the home office and related expenses.
Last week, National Irish Banks decided to write off EUR171m relating to its commercial property book.
Be aware that the IRS limits the annual amount each taxpayer can write off in charitable deductions.
E[acute accent]Unlike an original mortgage, you can't write off all the points paid during refinancing in a single year.
The increase in cost of goods sold was due to a combination of the following factors: significant decrease in the yield of the topaz stone production, write off of diamond inventory residual, delayed recovery in the demand for jewelry products for most of the Company's customers causing weakness in the profit margin, and shift in product mix to lower margin jewelry products.
9 million to write off goodwill and write down other related intangible assets by approximately $1.
9 million write off has been applied to the first quarter of fiscal 2002 although the computation of the write off was not completed until the fourth quarter of fiscal 2002.
65 per share relates to the write off of its investment in The Babcock & Wilcox Company ("B&W") and other related assets.