Financial Services Reporting
Impairment refers to a reduction in the recoverable amount of a financial asset or group of assets below its carrying value on the balance sheet. This concept is crucial as it impacts how financial instruments are classified and measured, determining whether an entity recognizes a loss and adjusts its financial statements accordingly. Impairment ensures that assets are not overstated on the balance sheet, which could mislead stakeholders about the financial health of an entity.
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