An Impaired Asset is an asset whose recoverable value has fallen below its carrying value on the balance sheet, meaning it is worth less than expected.
An asset becomes impaired when there is a permanent decline in its value due to factors like poor performance, market changes, or damage.
In banking, impaired assets often refer to loans that are not being repaid, similar to Non-Performing Assets (NPAs).
"A machine purchased for ₹10 lakh is now worth only ₹6 lakh due to damage: 👉 Impairment loss = ₹4 lakh"