Write-Up

What is a 'Write-Up'

A write-up is an increase made to the book value of an asset, because its carrying value is less than fair market value. A write-up generally occurs if a company is being acquired and its assets and liabilities are restated to fair market value, under the purchase method of M&A accounting. It may also occur if the initial value of the asset was not recorded properly, or if an earlier write-down in its value was too large. An asset write-up is the opposite of a write-down and both are non-cash items.

BREAKING DOWN 'Write-Up'

For example, assume Company A is acquiring Company B for $100 million, at which point the book value of Company B's net assets was $60 million. Before the acquisition can be completed, Company B's assets and liabilities have to be marked-to-market to determine their fair market value (FMV).


If the FMV of Company B's assets is determined to be $85 million, the increase in their book value of $25 million represents a write-up. The difference of $15 million between the FMV of Company B's assets and the purchase price of $100 million, is booked as goodwill on Company A's balance sheet.

RELATED TERMS
  1. Book Value

    1. The value at which an asset is carried on a balance sheet. ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or ...
  3. Liquidation Value

    The total worth of a company's physical assets when it goes out ...
  4. Level 3 Assets

    Assets whose fair value cannot be determined by using observable ...
  5. Adjusted Book Value

    A measure of a company's valuation after liabilities, including ...
  6. Adjusted Net Asset Method

    A business valuation procedure used in acquisition accounting ...
Related Articles
  1. Markets

    Market Value Versus Book Value

    Understanding the difference between book value and market value is a simple yet fundamentally critical component to analyze a company for investment.
  2. Investing

    The Difference Between Book and Market Value

    Book value is the price paid for an asset. It never changes as long as the asset is owned. Market value is the current price at which the asset can sell.
  3. Investing

    What's Fair Value?

    Fair value has three different meanings depending on the context.
  4. Markets

    Book Value: How Reliable Is It For Investors?

    In theory, a low P/B ratio means you have a cushion against poor performance. In practice, it is much less certain.
  5. Trading

    Using The Price-To-Book Ratio To Evaluate Companies

    The P/B ratio can be an easy way to determine a company's value, but it isn't magic!
  6. Managing Wealth

    Investment Value Vs. Fair Market Value: How They Differ

    Learn about the differences between an asset's investment value and its fair market value, including why many think fair market value is unrealistic.
  7. Investing

    Understanding Carrying Value

    Carrying value is the value of an asset as listed on a company’s balance sheet. Carrying value is the same as book value.
  8. Investing

    Explaining Write-Downs

    A write-down is a reduction in the book value of an asset because it is overvalued compared to the market value.
  9. Personal Finance

    Assessing Bank Assets: Are Your Savings Safe?

    Learn how to determine if your assets are safe or if your bank has spread itself too thin.
  10. Investing

    Value Investing: Finding Value In Financial Reports And Balance Sheets

    There is plenty of information about a company that you'll want to know as a value investor, but that you can't get from a casual glance at a stock quote or from reading most stock market commentary. ...
RELATED FAQS
  1. What is the difference between carrying value and fair value?

    Learn about the carrying value and fair value of assets and liabilities, what the carrying and fair value measure and the ... Read Answer >>
  2. What is the difference between book value and market value

    Learn the differences between book value and market value, and see how investors use each type to determine if a company ... Read Answer >>
  3. What is the difference between book value and carrying value

    Dig deeper into the definitions of carrying value and book value, and learn to differentiate between their various financial ... Read Answer >>
  4. What is the difference between a company's book value per share and its intrinsic ...

    Book value and intrinsic value are two ways to measure the value of a company.In simple terms, book value is based on the ... Read Answer >>
  5. What's the difference between book and market value?

    Book value is the price paid for a particular asset. This price never changes so long as you own the asset. On the other ... Read Answer >>
  6. How are a company's financial statements connected?

    When you do research on different companies by looking at their annual reports, you will typically come across two separate ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center