Sometimes, the value of an asset decreases significantly with time. In such a case, we need to write down the value of the asset to its current value.
Write down is performed in cases like Asset Depreciation, Damage of Goods, etc.
Let’s say you buy 100 pens. Now, you find that the value of the pens has decreased in the market. The new value of each pen is Rs. 9. In such a case, you would need to write down the value of the pens from Rs. 10 to Rs. 9. The total value of the pens would now be Rs. (90*10) i.e. Rs. 900.
- Write Off