Value adjustment
A value adjustment reduces the carrying amount of an asset because its actual value lies below it; unlike depreciation it is not scheduled but a reaction to a loss of value that has occurred.
Definition
Mainly affected are receivables — where the flat-rate variant is called the bad debt allowance —, inventories whose market value has fallen, and participations. The law requires the correction as soon as the lower value is recognisable.
If the reason later disappears, the adjustment must be released. Whoever leaves it in place thereby creates a hidden reserve — permitted under commercial law, but a distortion of the reported result.
Where to read it
What the software must be able to do
Check whether value adjustments can be held separately from the asset, so that gross value and correction both remain visible. Whoever writes the asset down directly loses the information.
Checked Aug 2026
More terms under Bookkeeping and retention: Accrual principle Accrued liabilities Annual accounts Association accounting Balance sheet Balance sheet total Book value Break-even point Business assets Business expenses Cash book Cash flow statement Cash receipts Contribution margin Cost centre Current assets Debit and credit Depreciation Double-entry bookkeeping Duty to keep accounts EBIT EBITDA Equity Equity ratio Financial year Fixed assets Fixed costs Foreign currency General ledger Gross profit Hidden reserves Income statement Inventory count Journal Journal entry Liabilities Liquidity Loss carry-forward Membership dues Net profit Opening balance sheet Overheads Pass-through item Prepaid expenses Provision Record-keeping ordinance Reserves Retained profit Simple accounts Swiss SME chart of accounts Tamper resistance Turnover Variable costs Volunteer-run structure Voucher Year-end closing modules