Impairment

1. Financial reporting.

A reduction in the recoverable amount of an asset below its carrying amount.

Impairment may apply, among other assets, to tangible fixed assets, goodwill, loans or inventory.

Relevant accounting standards include IAS 36, Section 27 of FRS 102 and IAS 2.

2.

The related accounting adjustment required to reduce the carrying amount of the asset in the balance sheet - to the new lower recoverable amount - and to recognise an impairment loss.

3.

More generally, any weakening, damage or reduction in value.

Causes of impairment may include damage, obsolescence and declining credit quality.

See also

• Amortisation
• Carrying amount
• Depreciation
• Fixed assets
• FRS 102
• Goodwill
• IAS 2
• IAS 36
• IFRS 9
• Impaired loan
• Net book value
• Net realisable value