Answer:
An impaired asset is an asset that has a market value less than the value listed on the company's balance sheet. When an asset is deemed to be impaired, it will need to be written down on the company's balance sheet to its current market value.
An asset is impaired if its projected future cash flows are less than its current carrying value. An asset may become impaired as a result of materially adverse changes in legal factors that have changed the asset’s value, significant changes in the asset’s market price due to a change in consumer demand, or damage to its physical condition. Another indicator of potential impairment occurs when an asset is more likely than not to be disposed prior to its original estimated disposal date. Asset accounts that are likely to become impaired are the company's accounts receivable, goodwill, and fixed assets.
