Impairment

How it is used

Companies carry out impairment tests, record an impairment loss or charge, and may later reverse it, except for goodwill. Typical triggers are falling sales, physical damage or changes in the market.

Example sentences

1. We recorded an impairment of 20 million lira on the closed factory.

2. Goodwill must be tested for impairment at least once a year.

Common collocations

• impairment test
• impairment loss
• impairment charge
• reverse an impairment
• write down

Related terms

• goodwillAn intangible asset that arises when a company buys another business for more than the fair value of its identifiable net assets.
• fair valueThe price that would be received to sell an asset, or paid to transfer a liability, in a normal transaction between market participants on a given date.
• write offTo remove an asset, such as an unpaid receivable or damaged stock, from the books because it no longer has value, recording the loss as an expense.
• depreciationThe gradual spreading of the cost of a physical asset, such as a machine or vehicle, over the years it is used, recorded as an expense each period.
• fixed assetA long-term physical asset that a business uses to operate rather than to sell, such as buildings, machinery, vehicles or computers.

More terms: Assets, Liabilities & Equity

• asset
• liability
• equity
• current asset
• current liability
• retained earnings
• inventory
• accrued expense
• prepaid expense
• deferred revenue
• provision
• amortization