A write-down is an accounting term that refers to the reduction in the book value of an asset when its fair market value (FMV) has fallen below the carrying book value, making it an impaired asset. The amount written down is the difference between the asset's book value and the amount of cash that the business can obtain by disposing of it in the most optimal manner¹.

Here's a bit more detail:

• It's necessary when the FMV of an asset is less than the carrying value currently on the books.
• The income statement will include an impairment loss, reducing net income.
• On the balance sheet, the asset's value is reduced by the difference between the book value and the cash the business could obtain by disposing of it.
An impairment cannot be deducted on taxes until the asset is sold or disposed of.
If an asset is "held for sale," the write-down must also include the expected costs of the sale¹.