A write-down is the accounting practice of reducing an asset’s original value in a business’s balance sheet. This adjustment is usually made when the asset’s value has significantly decreased due to factors such as damage, obsolescence, or depreciation. In other words, a write-down is a way of saying that a certain amount of the asset’s original value has been lost due to wear and tear or market changes. It’s important for businesses to keep track of their write-downs, as this information is often required by both external auditors and tax authorities. By fully recognizing these losses early on, a business can avoid potential financial trouble down the line.