Question

Write-down is

• A. increase in the value of an asset
• B. partial reduction in the book value of an asset
• C. amount received by or due to a company for goods or services it provides to customers.
• D. a certificate that indicates ownership of a portion of a corporation.

Hint:

Write-down means reducing the recorded value of an asset when its market or useful value decreases.

Answer 1

The Correct Option is B

Concept: Assets recorded in accounting books may lose value because of damage, obsolescence, market decline, or reduced usefulness.

Step 1: Understand the term “book value”.
Book value is the value at which an asset appears in accounting records.

Step 2: Understand the meaning of write-down.
When the actual value of an asset becomes lower than its recorded value, accountants reduce its value in the books. This reduction is known as a write-down.

Step 3: Differentiate between write-down and appreciation.
A write-down decreases asset value. It is not an increase in value. Hence Option (A) is incorrect.

Step 4: Select the correct definition.
A write-down means: \[ \text{Partial reduction in the book value of an asset} \] Therefore, \[ \boxed{\text{Option (B)}} \] is correct.