Write-offable

Write-offable describes an asset or expense deemed worthless or unrecoverable for tax or accounting purposes. It signifies a situation where the value of something is reduced or eliminated, and the loss is recognized in financial statements. This often applies to bad debts, obsolete inventory, or investments that have declined significantly in value. Determining write-offability involves assessing factors such as recoverability prospects, market value, and accounting standards. The process allows businesses to reflect true financial positions and potentially reduce tax liabilities by deducting the loss from taxable income. This contrasts with situations where assets retain value.

Write-offable meaning with examples

• The company had a large amount of uncollectible accounts receivable, making a significant portion of them write-offable. After a thorough review and failed attempts at debt recovery, the CFO instructed the accounting team to proceed with writing off the bad debts to accurately reflect the company's financial health and reduce future tax obligations.
• Due to rapidly changing technology, the outdated computer equipment in the office became write-offable. The company decided to replace the existing hardware, acknowledging that selling or repairing the old equipment wasn't economical, and took steps to ensure they were write-offable to reduce their taxable income during the end-of-year accounting.
• After a period of significant market decline, the investment portfolio lost significant value, and certain stocks became write-offable. The financial advisor analyzed the losses, identified the non-recoverable investments and recommended the firm reflect these losses on the tax returns as a means to reduce the taxes owed by the company.
• Because a large portion of raw material stock had been damaged by a flood, the inventory was deemed write-offable. The cost associated with the damaged goods no longer represented an asset with potential value and the company proceeded with the legal and financial requirements associated with writing off the inventory.