Impairment

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

Impairment is a reduction in an asset’s recoverable amount below its carrying amount, requiring a write-down and recognition of impairment loss.

- Used to prepare and present financial statements and disclosures.
- Used when classifying items and explaining accounting impacts to users of the financials.

- Example: During financial statement preparation, **Impairment** guides how information is presented and disclosed.

- Why it matters: Enhances transparency, improves comparability, and reduces misunderstanding by stakeholders.