Definition - What does Write-Off mean?
A write off is a tax deduction that is made by a company due to loss or depreciation. It can also mean the inability to recoup value such as when a vehicle is insured and crashes to the extent it cannot be repaired. The vehicle would be said to be a write off. If a company has an asset that that has a loan against it, the law allows the company to deduct a set amount or percent of the value of the asset each year in keeping with the idea that the asset has a set life span and, therefore, loses value each year.
From a debt and even a business perspective, a write-off can also be bad debt that the company believes will not be repaid by the borrower. They often "write-off" the debt from their books as the cost of doing business.
Justipedia explains Write-Off
There are different reasons for write-offs. They can be calculated over a set amount of time or by a percent of the overall value. Once the asset is completely written off it would not appear as an asset on the company accounts.
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