A write-down is what occurs when a company reduces the value of an asset on their books. This results in a charge against earnings. For instance, if a company has a building on their books valued at $1,000,000 but an internal audit reveals that its market value is actually $800,000, this would result in a $200,000 write-down which would be deducted from reported earnings. Successive increases in value of the same asset would be charged to earnings.
Many of the consequences of the subprime crisis at financial institutions in 2007 and 2008 are referred to as a "write-down", which is similar to a "write-off". While a write-down decreases the value of an asset in the company's balance sheet, a write-off completely eliminates the value of the loan from the balance sheet. Many companies during the subprime mortgage crisis had a combination of both write-offs and write-downs.
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