Glossary
What is a write-off?
What writing off means for debts, stock and fixed assets, and the journal that takes a worthless asset out of the books.
Updated
In short
A write-off removes the value of an asset that is lost, worthless or uncollectible and charges it to profit. SimpleERP writes off fixed assets and damaged stock directly; bad debts go through a manual journal.
A write-off removes the value of an asset from the books once it has no realistic value left: a customer due that will not be paid, stock that is damaged or lost, or a machine scrapped with nothing received. The remaining book value is charged to profit as a loss, so the balance sheet stops showing something the business no longer has.
Write-off: a worked example
Lakshmi Steel Furnitures scraps six old office desks on 10 October 2026. They cost ₹48,000, depreciation of ₹44,000 has been posted, and nothing is received.
| Date | Account | Debit | Credit |
|---|---|---|---|
| 10 Oct 2026 | Accumulated Depreciation | ₹44,000 | |
| 10 Oct 2026 | Gain / Loss on Asset Disposal | ₹4,000 | |
| 10 Oct 2026 | Fixed Assets | ₹48,000 |
FAQ
Questions, answered
When should I write off a bad debt?
When recovery is clearly not going to happen: the customer has closed, cannot be traced, or legal recovery would cost more than the due. Many businesses provide for the debt first and write it off later. Keep the reasons on file for the auditor.
Does writing off a debt stop me from collecting it?
No. The write-off is a book entry. If the customer pays later, record the money and credit it to bad debts recovered or other income in the year it arrives.
How do I write off damaged stock in SimpleERP?
Post a stock adjustment with the reason damaged and the quantity lost. The stock falls at its average cost, and the value moves from Inventory to the Inventory Adjustments expense account, so the loss shows in profit.
Is a write-off the same as depreciation?
No. Depreciation spreads an asset's cost over its useful life month by month. A write-off removes whatever value is left in one go, when the asset is lost, scrapped or worthless.
Related
Keep reading
Provision
An amount charged to profit now for a likely liability or loss whose exact amount or timing is not yet known.
Read moreAsset disposal
Removing a sold or scrapped fixed asset from the books and recording the gain or loss against its book value.
Read moreFixed assets
An asset register with monthly depreciation, custodians, maintenance and disposal.
Read more
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