Write-Off

Write-Off

A write-off is an accounting action that reduces the value of an asset or expense on the financial statements. This typically occurs when an asset is deemed uncollectible or no longer valuable, such as uncollectible accounts receivable or obsolete inventory.

In taxation, a write-off refers to an expense that can be deducted from taxable income, thereby reducing the amount of income subject to tax. For example, a business may write off bad debts by reporting them as a loss, which lowers its taxable income for the year.

Overall, write-offs are essential for accurately reflecting a company’s financial position and tax liabilities.