Asset Impairment
Recognizing Declines in Asset Value
Asset impairment occurs when an asset's carrying amount exceeds its recoverable amount or fair value, depending on the applicable accounting rules. Recognizing impairment ensures assets are not reported above their recoverable economic value.
- Evaluate indicators of impairment regularly.
- Record impairment losses when required.
- Goodwill impairment follows separate guidance.
- Impairment reduces both asset values and earnings.
Note
Unexpected impairment losses may signal declining business performance or poor investment decisions.
Summary
Impairment analysis ensures asset values remain realistic and economically supportable.