Australia Perplexed: Textbook says "Write downs can INCREASE earnings"


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In my text on warning signs of accounting fraud, the book says:

"Companies can use write downs to mask operating expenses which results in overstated earnings"

Are not write downs expenses that will not increase but in fact decreases reported earnings in that year? And i am even thinking that if write downs are one-offs that you could even argue they understate true earnings of the business and in fact mask the fact it earns more than reported due to the write downs decreasing reported earning.

What ami missing?

How on earth can writes downs be used to mask operating expenses and increase earnings?
 
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Fidget

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Sounds odd to me as well, but I think perhaps that it's talking about using reversal of previous write downs, which is allowed under some accounting standards, and would result in a decrease in total expenses and increase profit.
 
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Reversal of Impairment maybe one.

Crediting a provision back to profit and loss that was made for a bad or doubtful debt when a favourable outcome arises...maybe?
 
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Thanks for the answers, im glad im not the only one. And possibly the book meant something else as others pointed out. But atleast i know my fundamental understanding isnt totally wrong about write downs actually normally decreasing earnings not increasing them!
 

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