In relation to debts (liabilities) and receivables/ inventory (assets)- usually associated with credit sales), it is the elimination of the recorded amount of an asset or a liability.

More specifically, write-off may refer to the complete transfer of an asset account to an expense or loss account. This implies that the asset will produce no future economic benefits. For example, the asset account of an inventory item may need to be written off in case it is destructed and there is no insurance coverage to make up such a loss and the inventory item has no salvage value to lessen the extent of loss.

It may also refer to the elimination of a debtor’s account balance due to inability of the creditor to collect receivables (for whatever reason such as debtor’s bankruptcy).