Write down

Read this article to me

Definition

In business and finance, a “write down” refers to the accounting practice of reducing the book value of an asset on a company’s balance sheet.

What is a write down?

This adjustment is made when the fair market value of the asset has declined below its carrying amount, or the amount at which it is currently recorded on the books. A write down is a recognition that the asset’s recoverable value has decreased, and it provides a more accurate representation of the asset’s true economic value.

The primary reason for a write down is that the carrying amount of an asset exceeds its recoverable amount. This can happen due to factors such as a decline in market value, technological obsolescence, or changes in economic conditions.

Impairment triggers a write down, and the assessment of impairment is typically conducted for assets like goodwill, intangible assets, long-term investments, or property, plant, and equipment.

The write down is recorded as an expense on the income statement, reducing the company’s net income. At the same time, the value of the impaired asset on the balance sheet is adjusted downward.

Write downs may have tax implications. In some jurisdictions, the decrease in the value of assets can lead to tax deductions, reducing the company’s taxable income.

Companies are required to disclose significant write downs in financial statements to provide transparency to investors and stakeholders.

Example of a write down

ABC Corporation, a technology company, holds inventory of electronic components that have become obsolete due to advancements in technology. As a result, the market value of this inventory has declined significantly below its original cost.

The company’s accounting department assesses the situation and determines that a write-down of the inventory is necessary to accurately reflect its true value on the balance sheet.

By writing down the inventory, ABC Corporation acknowledges the loss in value and ensures its financial statements provide a more accurate representation of the company’s financial position.

Ready to grow your business?

Clever finance tips and the latest news

Delivered to your inbox monthly

Join the 95,000+ businesses just like yours getting the Swoop newsletter.

Free. No spam. Opt out whenever you like.

We work with world class partners to help us support businesses with finance

Our offices:

Disclaimer: Swoop Finance helps UK firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans or other finance products ourselves. We can introduce you to a panel of lenders, equity funds and grant agencies. Whichever lender you choose we may receive commission from them (either a fixed fee of fixed % of the amount you receive) and different lenders pay different rates. For certain lenders, we do have influence over the interest rate, and this can impact the amount you pay under the agreement. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop Finance can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness. Swoop Finance Limited is registered with the Financial Conduct Authority as an Account Information Services Provider (reference number 833145). Swoop Finance Limited is authorised as a credit broker under FCA registration number 936513. If you feel you have a complaint, please read our complaints section highlighted above and also contained within our terms and conditions. Swoop Finance Ltd is registered with Companies House (company number 11163382, registered address The Stable Yard, Vicarage Road, Stony Stratford, Milton Keynes MK11 1BN). VAT number: 300080279

© Swoop 2025

Looks like you're in . Go to our site to find relevant products for your country. Go to Swoop