Impairment

Impairment refers to a decrease in the value of an asset or investment due to a significant and unexpected decline in its market value or the asset's inability to generate the expected cash flows. This decrease in value is typically recognized through a write-down on the company's financial statements to reflect the asset's reduced worth. Impairment can result from various factors such as economic downturns, changes in market conditions, or poor performance of the asset. It is important for companies to regularly assess their assets for impairment to ensure accurate financial reporting and decision-making.