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Write-Off
Definition
The financial removal of unsellable inventory from a company’s books due to spoilage, damages, shrink, or obsolescence. A write-off reduces inventory value and recognizes product that cannot be recovered or sold.
How It's Calculated
Value of unsellable inventory (units × cost or book value).
Example
A snack manufacturer records a $45,000 write-off after outdated seasonal products remain unsold following a holiday promotion.
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