What does write-off mean?

A write-off in finance refers to the process of removing an asset or liability from a company's balance sheet. This typically occurs when the value of the asset has depreciated significantly or when it is deemed to have no future economic benefit. It can also refer to the cancellation of a bad debt or uncollectible accounts receivable. When an asset is written off, it is essentially being recognized as a loss on the company's financial statements. This can have tax implications and can also impact the company's overall financial health and profitability. In the case of bad debt write-offs, it refers to the removal of an accounts receivable from a company's financial records because it is deemed to be uncollectible. This can occur when a customer fails to pay their debts, goes bankrupt, or is otherwise unable to fulfill their financial obligations. In general, write-offs are a way for companies to accurately reflect the true value of their assets and liabilities on their financial statements. It is a way of acknowledging and accounting for the loss of value or the inability to collect on certain financial obligations.