A write-down in accounting occurs when the book value of an asset is reduced because it is considered to have diminished in utility or market value. For instance, if a company holds inventory that no longer has demand or a previously purchased vehicle depreciates rapidly, the reported book value decreases via a write-down.

The process ensures that a company's financial records accurately reflect the real-time value of its holdings. A write-down does not necessarily mean complete devaluation, differing from a write-off. Companies often encounter write-downs in cases like obsolete inventory or impaired goodwill.

An example is: "ABC Corp performed a write-down of $20,000 on unsaleable merchandise bringing the inventory valuation in line with current market conditions." Incorporating such practices aligns financial reporting with accounting guidelines like GAAP or IFRS, maintaining integrity in financial documentation.