writedown


Write-Off

A reduction in an individual's or a company's income as the result of an expense. For example, an unpayable credit sale may be a write-off for the creditor, especially if the debtor declares bankruptcy. The bankruptcy means that the debtor is unable to pay the debt, which results in a loss of income for the creditor. A write-off may usually be deducted from one's taxable income.

writedown

A reduction in the value of an asset carried on a firm's financial statements. For example, the firm's accountants, believing the inventory is overvalued, may decide to take a writedown by reducing inventory valuation. Unlike a writeoff, a writedown does not result in elimination of the asset.