An asset write-off removes an asset from the balance sheet when it no longer has any value to the business: it has been lost, stolen or destroyed, or it is obsolete and cannot be sold. Its cost and accumulated depreciation are taken out of the books, and whatever net book value is left is charged to profit as a loss.
"Writing off" is also used for bad debts and damaged inventory. This page covers fixed assets: equipment, vehicles, IT hardware and furniture held in a fixed asset register.
Write-off vs impairment vs disposal
The three are often confused. The question to ask is whether the asset stays on the books, and whether anything is received.
| Item | Write-off | Impairment (write-down) | Disposal by sale |
|---|---|---|---|
| What happens | Asset removed; nothing received | Asset stays, carrying amount reduced | Asset removed in exchange for proceeds |
| Typical cause | Lost, stolen, destroyed, worthless | Damage, obsolescence or falling demand that cuts recoverable amount (IAS 36 / ASC 360) | Sold, traded in or scrapped for value |
| Profit effect | Loss equal to remaining NBV | Impairment loss for the reduction | Gain or loss = proceeds − NBV |
| Depreciation after | Stops | Continues on the reduced amount | Stops |
A write-off is effectively a disposal with zero proceeds.
Journal entry for an asset write-off
A laptop cost $1,800. After three years, accumulated depreciation is $1,350, so NBV is $450. It is stolen and not recovered.
If an insurer later pays $300, that is recognized separately when it becomes receivable (Dr Insurance receivable $300 / Cr Other income $300). IAS 16 treats compensation from third parties as a separate event from the write-off, so the two are not netted when the loss is recorded.
A fully depreciated asset that is scrapped has an NBV of zero, so there is no loss. You still remove its cost and accumulated depreciation, or the register will overstate what you own.
Write-offs that come from audits
Many write-offs start as a missing item in a physical audit or stock-take. The register says an asset exists; nobody can find it. That variance needs a decision, not an automatic write-off.
- Search first. Check the last custodian, check-out records, recent moves and repair jobs. Items are often in another room or with a contractor.
- Escalate. Give it a deadline, for example one more audit cycle, before treating it as lost.
- Approve. The asset owner and finance sign off, with a reason: lost, stolen, damaged beyond repair or obsolete.
- Keep evidence. Audit results, police or incident reports, insurer correspondence. A disposal form gives a consistent record.
- Post and update the register. Record the write-off entry and set the asset to a terminal status so it cannot be counted or depreciated again.
Examples by sector
- School: a tablet trolley comes back two devices short after a term. After a search and a report, the two tablets are written off.
- Logistics: a pallet jack is crushed in a loading-bay accident. It has no salvage value, so its NBV is written off.
- NGO: field laptops lost in a flood. The funder may require evidence before the write-off is accepted.
Common mistakes
- Writing off too fast. Items found later have to be reinstated, and the audit trail gets messy.
- Never writing off. Items that are clearly gone stay on the books as ghost assets, overstating NBV.
- Netting insurance against the loss. Record the loss and the recovery separately.
- Removing the row, not the balances. Deleting a spreadsheet row without a journal entry leaves the ledger out of step with the register.
Spreadsheet vs software
In a spreadsheet, a write-off usually means colouring a row red or moving it to a "disposed" tab, then posting the entry by hand. The asset's history, who had it and when it was last seen, lives somewhere else, if anywhere. Software keeps the audit result, the custody history and the disposal on the same record, so the decision is documented where the next auditor will look.
Write-offs in Asetavo
In Asetavo audits and stock-takes (Growth plan and above), each variance is resolved as Found it, Still searching or Write off, and reports show the combined value of missing assets. On the Business plan, depreciation records the disposal with write-off as the method, calculates the loss against NBV, freezes NBV and keeps who recorded it. See audits and stock-takes. For how NBV is calculated before a write-off, see net book value explained.
