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write-down |
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Write-down 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-down (1) To reduce the value of an asset on the books and records of a company because of a decrease in value of that asset. Because of the mechanics of double-entry bookkeeping, writing down an asset has the consequence of reducing income for that time period. The timing of write-downs is therefore critical because of the impact on taxable income, earnings reported to shareholders, asset value, earnings reported to lenders, and other instances. Large companies will often write down assets in a quarter that is already disappointing, in an attempt to get all the bad news over with at the same time.(2) A lender's agreement to accept less than the full principal balance of a loan, usually in recognition of the fact that it won't collect the full balance anyway. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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