A reduction in the recorded value of an asset to reflect its current fair market value when it has declined below its original cost. Unlike a write-off, a write-down doesn't eliminate the asset entirely but acknowledges that its value has permanently decreased.
From the practice of literally writing down a lower value in accounting records. The term emerged in the early 20th century as accounting standards required more accurate reflection of asset values. It developed alongside concepts of fair value accounting and asset impairment testing.
A write-down is like admitting your car isn't worth what you paid for it anymore - you still own it, but you acknowledge it's worth less! It's accounting's way of being honest about reality when assets lose value permanently, not just temporarily.
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