#write-down

The weird reality of write-downs

With increasing regularity (eg Star Trek: Prodigy) we see shows being dropped, never shown or mysteriously removed from catalogues. What seems to be tens of millions (maybe more) of dollars gets thrown down the drain, in what businesses see as a good move. What is going on? It’s all about the accounting I’m no accountant. It seems it’s better (for tax rules, which could be changed were there…

Bearish outlook leads to $50m Nestle Australia write-down

CANBERRA: Falling revenue and losses on asset sales have weighed on Nestle Australia, one of the biggest suppliers to the country’s major supermarket chains, Woolworths and Coles.

And a bearish outlook for the manufacturer of products such as Uncle Tobys cereal, Kit Kat chocolate bars, Maggi noodles, and Nescafe and Nespresso coffee has contributed to a writedown of $51.2 million.

Nestle…

Reducing the book value of an asset because it is overvalued compared to the market value. A write-down typically occurs on a company's financial statement, when the carrying value of the asset can no longer be justified as fair value and the likelihood of receiving the cost (book value) is questionable at best.

Write-downs are typically reflected in a company's income statement as an above-the-line expense, thereby reducing net income. This, however, is not always a bad thing, since a write-down is simply a paper loss, which, since it lowers net income, will reduce a firm's tax burden. Companies will usually attempt to time large write-downs together, so they can "take a bath" in one reporting period with the hope of quickly recovering in the next period.