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For insurance write-offs, see Total loss.
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A write-off is a reduction of the recognized value of something. In accounting, this is a recognition of the reduced or zero value of an asset. In income tax statements, this is a reduction of taxable income, as a recognition of certain expenses required vĩ đại produce the income.
In income tax calculation, a write-off is the itemized deduction of an item's value from a person's taxable income. Thus, if a person in the United States has a taxable income of $50,000 per year, a $100 telephone for business use would lower the taxable income vĩ đại $49,900. If that person is in a 25% tax bracket, the tax due would be lowered by $25. Thus the net cost of the telephone is $75 instead of $100.
In order for business owners vĩ đại write off business expenses, the IRS states that purchases must be both ordinary and necessary. This means that deductible items must be usual and required for the business owner's field of work. For example, a telemarketer may deduct the purchase of a phone, since phones are used normally and necessarily in their work, whereas a saxophonist may not.
In business accounting, the term 'write-off' is used vĩ đại refer vĩ đại an investment (such as a purchase of sellable goods) for which a return on the investment is now impossible or unlikely. The item's potential return is thus canceled and removed from ('written off') the business's balance sheet. Common write-offs in retail include spoiled and damaged goods. In commercial or industrial settings, a productive asset may be subject vĩ đại write-off if it suffers failure or accident damage that is infeasible vĩ đại repair, leaving the asset unusable for its intended purpose.
Similarly, banks write off bad debt that is declared non collectable (such as a loan on a defunct business, or a credit thẻ due that is in default), removing it from their balance sheets. A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able vĩ đại write off certain expenses that are required vĩ đại lập cập the business, or have been incurred in the operation of the business and detract from retained revenues.
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A negative write-off refers vĩ đại the decision not vĩ đại pay back an individual or organization that has overpaid on an trương mục. Negative write-offs can sometimes be seen as fraudulent activity if those who overpay a claim or bill are not informed that they have overpaid and are not given any chance vĩ đại reconcile their overpayment or be refunded.
Some institutions such as banks, hospitals, universities, and other large organizations regularly perform negative write-offs, especially when the amount is considered low (e.g., $5 at some institutions or up vĩ đại $15 or more at others).
A write-down is an accounting treatment that recognizes the reduced value of an impaired asset. The value of an asset may change due vĩ đại fundamental changes in technology or markets. One example is when one company purchases another and pays more kêu ca the net fair value of its assets and liabilities. The excess purchase price is recorded on the buying company's accounts as goodwill. If it becomes apparent that the purchased asset no longer has the value recorded in the goodwill trương mục (i.e., if the asset cannot be resold at the same price), the value in the goodwill asset trương mục is "written down". One example is when Rupert Murdoch's News Corp bought Wall Street Journal publisher Dow Jones at a 60% premium in 2007, which News Corp. later had vĩ đại write down by $2.8 billion because of declining advertising revenues.
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A write-down is sometimes considered synonymous with a write-off. The distinction is that while a write-off is generally completely removed from the balance sheet, a write-down leaves the asset with a lower value. As an example, one of the consequences of the 2007 subprime crisis for financial institutions was a revaluation under mark-to-market rules: "Washington Mutual will write down by $150 million the value of $17 billion in loans".
- Hull loss
- Revaluation of fixed assets
Look up write-off in Wiktionary, the không lấy phí dictionary.
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