Impairment

Impairment is a reduction in the value of an asset when its carrying amount exceeds its recoverable amount. It reflects a permanent decline in value.

Impairment losses are recorded on the income statement and reduce the asset's book value. It differs from depreciation, which is a systematic allocation of cost over time.

Related Terms

Depreciation

Depreciation is the accounting method of allocating the cost of a tangible asset over its useful lif...

Write-off

A write-off is an accounting action that reduces the carrying value of an asset. It is often used wh...

Balance Sheet

A balance sheet is a financial statement that reports a company's assets, liabilities, and sharehold...

Income Statement

An income statement is a financial statement that summarizes revenue, expenses, and profit over a sp...

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