Tax Write-Off
What constitutes a write-off and a write-back?
A write-off involves the reduction of debit balances that are no longer applicable, treating them as expenses. Conversely, a write-back entails the decrease of credit balances, recognizing them as income.
Why are write-offs performed?
Write-offs are carried out to diminish the value of an asset, debiting the expense account. This action signifies a loss or expense, effectively removing the associated value from the company’s balance sheet. Write-offs occur when an asset cannot be recovered, is no longer operational, or has significantly depreciated.
What transpires in the event of a write-off?
When a vehicle is considered a write-off, the insurer typically offers a settlement amount based on the car’s pre-accident value, deducting any applicable excess that must be paid.
What constitutes the write-off policy of banks?
Banks adhere to a write-off policy that includes technical write-offs. This standard banking practice aims to cleanse balance sheets of bad debts, which are either deemed irrecoverable or are expected to require disproportionate resources for recovery.