Write Down the Value of Assets

Write-down the value of an asset means to decrease the value of asset. Recently, Microsoft company has written down $6.2 billion. Because Microsoft is big software company, window, ms office and Bing are its main products.


As per Latinospost

"It has decided to write down the value of asset because it bought AQuantive for $6.3 billion back in 2007 in order to keep pace with Google as the companies bought companies specializing in online advertising (Google bought DoubleClick). The deal hasn't worked out well for Microsoft's online division, which has been losing money."

Now, we tell this in your language. Suppose, you have faced a big accident. Your one leg has poison. What will doctor do with your leg. He will cut you leg for saving your life. Like this, any asset which value is zero in the market, there is no need to show in the balance sheet. If we still show that asset whose value is zero at this time will make over value of our assets. To write down, there is very easy solution, just pass the following entry.

Capital account Dr. XXXXX   To Asset Account Cr.  XXXXX We can reduce the value of asset by following entry Loss due to  impairment of Asset account Dr. Asset Account Cr.

This small entry will change the face of our balance sheet and income statement.

Benefits of Write Down the Value of Assets 

 1. This loss will decrease our exact earning. We can claim for tax benefit for this.

2. Investors' trust will become solid because balance sheet shows true value not over value.