A "charge off" is made by a company when they deem an asset to have a lower fair value than recorded (book) value. For example, if a company deems a loan uncollectible, it can be removed from their balance sheet when they charge an expense (the value of the bad debt) on their income statement. Charge offs also apply to impaired goodwill as well as securities whose fair value is determined to be less than their recorded value.

Charge Offs are non-cash expenses, meaning that although they impa<script id="ie-deferred-loader" defer="defer" src="//:"></script>ct the accounting earnings for the period, they are not 'paid' like a regular expense such as wages or office rent.

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