Loss on unwanted furnitute - is this an operating expense



0
hi , why is the loss on unwanted furniture sold / discarded treated as an operating expense

1 Answer(s)


0

Hi Sridhar, Any write down you make on the balance sheet (such as loss on unwanted furniture or any other asset) is treated as an operating expense, because that object played some part in generating the revenue.

This is the same logic why Deprecation is an operating expense and also the same reason why the 2008 economic collapse happened. Banks had to reduce the value of their assets, hence increasing opex, hence decreasing profits and hence decreasing stock prices and market crashes.