Direct Write-Off Method
Accounting glossary · Understand, connect, apply
The direct write-off method recognizes a receivable loss when a specific balance is determined to be uncollectible rather than estimating losses through an allowance in advance.
Example
A business concludes that a $100 customer balance cannot be collected and removes the receivable with an expense under this method.
Remember the difference
This approach may be unsuitable for material general-purpose reporting because recognition can be too late. Tax treatment can differ from financial reporting.
Updated 3 November 2026. Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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