What is impairment?
submitted by Ameer

Kristine

Impairment in accounting is when the resale value of a long-term asset is reduced for some reason. It's basically when the actual value goes below its carrying amount. If you have impairment of your asset, you have to reduce its value on your books.The amount that's reduced is a loss, and you recognize that loss in the income statement. You have to recognize impairment so you're not overstating the real value of your assets.

charity

Impairment is when an asset's value on the books is higher than what it's actually worth now. If the asset gets damaged or becomes obsolete, companies have to lower its value on their financial statements and record a loss. Basically, it's like realizing something isn't as valuable as it used to be.

Rho

When an asset gets impaired, it's damaged, or otherwise not as usable as it used to be.

When you get a piece of equipment, you use depreciation to account for wear and tear. Impairment is a little different though. It's when you account for damage that's beyond regular wear and tear. Say your tractor tips over and is majorly bent out of shape. It's impaired. Now it's not worth as much as it used to be, and you need to recognize that loss of value on your books.