Write-down definition

Write-down is the reduction of the book value of an asset. A write-down may be required due to changing market values, obsolescence, damage or a change in the nature of the business.

A write-down is typically associated with an accounting period change. For example, if an inventory item is determined to have depreciated in value for some reason, the write-down should be taken in the current fiscal year, and before the new fiscal year begins. The purpose is to begin the new accounting year with a more realistic and accurate balance sheet.