Impairment is a permanent decline in the value of an asset. This situation exists when the cash flows or other benefits generated by an asset decline, as determined through a periodic assessment. If there is impairment, then the difference between the fair value of the asset and its carrying amount is written off.

Depending on the situation, an impairment can cause a major decline in the book value of a business.

Related Courses

Fixed Asset Accounting 
GAAP Guidebook