Removal of a recorded amount from the books when a receivable, asset, or identified balance is no longer expected to provide value.
A write-off removes a recorded amount from the books when the accountant concludes that the identified balance is no longer recoverable or no longer has useful value. The term is commonly used for uncollectible receivables, obsolete inventory, and retired or abandoned assets.
Write-offs stop the balance sheet from carrying clearly unrecoverable amounts. They also show whether the loss was anticipated earlier through an allowance or only recognized once the failure became certain.
For receivables, a write-off usually removes a specific customer balance against the allowance for doubtful accounts. For fixed assets, a write-off removes the asset’s recorded cost and any related accumulated depreciation before any remaining gain or loss is measured.
The accounting effect depends on what was estimated earlier. A receivable write-off may not create a new expense if the allowance already captured the expected loss. By contrast, a direct write-off method records the expense only when the failure is confirmed.
A company confirms that a 900 customer invoice will not be collected and writes it off against an existing allowance:
| Account | Debit | Credit |
|---|---|---|
| Allowance for Doubtful Accounts | 900 | |
| Accounts Receivable | 900 |
That entry removes the specific receivable without creating a second bad-debt expense.
A write-off is not automatically a new period expense, and it is not the same as a write-down. A write-down reduces a balance but leaves part of it in place. A write-off removes the identified balance being addressed.