Charge-Off


Charge-Off
A term describing an expense on a company's income statement. A charge-off will fall under one of the following categories:

1. A debt that is deemed uncollectible by the reporting firm and is subsequently written off. This type will be classified as 'bad debt expense' on the income statement, and removed from the balance sheet.

2. A probable one-time extraordinary expense incurred by a company that negatively affects earnings and results in a write-down of some of the firm's assets. The write-down arises due to impairments of assets.

1. Bad debt expenses arise when a firm is unable to collect on some of its accounts receivable (AR). When this occurs, the firm has little recourse; it could either sell the probable bad debt to a collection agency (a sale will be recorded on the firm's books, but not as an expense), or it could just write-off the uncollectible amount as an expense on the income statement.

2. Companies often say something like: "we will take a one-time charge against earnings this quarter." This means that an extraordinary event has occurred and, altough it affects present earnings, it is unlikely to occur again. As a result, a company will usually provide an earnings per share (EPS) figure with and without this charge.


Investment dictionary. . 2012.

Look at other dictionaries:

  • charge-off — ˈcharge off noun [countable] ACCOUNTING COMMERCE when you lose profit because money that is owed to you will not be repaid: • Charge offs for loan losses were only 0.7% of total loans, about half the average for regional banks. * * * charge off… …   Financial and business terms

  • charge off — {v.} 1. To consider or record as a loss, especially in an account book. * /The store owner charged off all of the last season s stock of suits./ Syn.: WRITE OFF(1). 2. or[charge up] {informal} To accept or remember (something) as a mistake and… …   Dictionary of American idioms

  • charge off — {v.} 1. To consider or record as a loss, especially in an account book. * /The store owner charged off all of the last season s stock of suits./ Syn.: WRITE OFF(1). 2. or[charge up] {informal} To accept or remember (something) as a mistake and… …   Dictionary of American idioms

  • charge-off — Eliminate or write off. Dictionary from West s Encyclopedia of American Law. 2005. charge off Eliminate or write off. Short Dictionary of …   Law dictionary

  • charge off — vt: to treat as a loss or expense; specif: to deduct as a bad debt part of the debt is charged off Code of Federal Regulations Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • Charge-off — A charge off or chargeoff is the declaration by a creditor (usually a credit card account) that an amount of debt is unlikely to be collected. This occurs when a consumer becomes severely delinquent on a debt. Traditionally, creditors will make… …   Wikipedia

  • charge-off — ˈ ̷ ̷ˌ ̷ ̷ noun ( s) Etymology: charge off 1. : the reduction of the value at which an asset has been carried on the books bad debt charge offs 2. : the amount by which an account is reduced by cha …   Useful english dictionary

  • charge off — See: bad debt * * * UK US charge off Phrasal Verb with charge({{}}/tʃɑːdʒ/ verb ► FINANCE to consider as a loss a debt that will probably not be paid: »The company charged off $120 million worth of bad credit card debt in the third quarter …   Financial and business terms

  • charge off — transitive verb Date: 1892 to treat as a loss or expense • charge off noun …   New Collegiate Dictionary

  • charge-off — noun see charge off …   New Collegiate Dictionary