Write-Up Definition & Example

Write-Up Definition


A write-up is when an asset's value is increased on the income statement, to reflect its increased market value.  The benefit of a write-up is that it allows a company to increase its profits on the income statement without increasing its expenditures.  This in turn makes the company a more attractive opportunity to potential investors.

Write-Up Example


Hypothetically let's say that a company produces 5,000 widgets.  The company plans to sell these widgets at $5 per widget.  So, the company would reflect this inventory with a value of $25,000.  Now, if inflation were to increase significantly, the company would have to increase the cost of the widget to $5.25.  Hence the value of the inventory would now be $26,250.  This increase in the value of the inventory would be reflected in the company's income statement, but would not be reflected as an expenditure.
Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...

Tradingsim.com
Day Trading Simulator

Tradingsim.com provides the ability to simulate day trading 24 hours a day from anywhere in the world. TradingSim provides tick by tick data for...

Send this article to a friend.

Enter multiple addresses on separate lines or separate them with commas.