write-down

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Write-down

Reducing the book value of an asset if its is overstated compared to current market values.

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.

References in periodicals archive ?
In the euro area, write-downs so far have totaled $154 billion, with another $750 billion in write-downs expected through 2010.
In addition, Merrill took write-downs of $900 million on exposure to Alt-A loans, which are a slightly better credit risk than subprime mortgages, and on mortgages outside the US.
RBS had been under intense pressure to reveal the extent of its liabilities after banking groups including HSBC, Citi-group Bank of America, Morgan Stanley unveiled multi-billion pound write-downs.
s Chairman and chief executive officer Charles Prince resigned on Sunday and the bank may suffer up to an $11 billion write-down for subprime losses, the bank said Sunday.
Notably, voluntary asset write-downs are one of the few income-decreasing accounting choices studied in the literature.
Other major write-downs, before taxes, included BHP's Hot Briquetted Iron project at Port Hedland, Western Australia, $A590M; the Hartley platinum project in Zimbabwe, $A357M; the New Zealand Steelworks, $A156M; and the Beenup mineral-sands project in the far southwest of Western Australia, $A150M.
Further, firm A is losing all of its profits and firm B is losing half its profits in write-downs.
Inventory write-down After adopting a cost flow procedure and determining the inventory's initial basis, the practitioner must determine whether the inventory's basis may be subsequently written down.
This Greek write-down will be surely accompanied by a new austerity package cutting public sector salaries, suspending employment for tens of thousands of public workers and curtailing pensions to higher income individuals.
The entire amount of the project write-downs above will be charged in the second quarter of 2012.
The commercialisation of the diamond projects, acquired via the takeover of Isle of Man-registered Pangea DiamondFields plc in March, also failed the company's expectations and entailed a write-down of SEK212m.
The investment bank forecast earlier this month its write-downs on such mortgages will reach about $4.