Work out impairment loss instantly with clear inputs, formula shown and shareable results.
An asset is impaired when its carrying amount exceeds its recoverable amount, defined as the higher of fair value less costs of disposal and value in use. The write-down is the difference, and it goes to profit or loss unless a revaluation surplus exists to absorb it.
Recoverable amount
Recoverable = max(Fair value less costs of disposal, Value in use)
Impairment loss
Loss = max(0, Carrying amount - Recoverable amount)
Indicative accounting estimate. Impairment testing depends on cash-generating unit definition, discount rates and framework (IFRS or local GAAP). Not accounting or financial advice.
Because a rational entity will choose the better of selling the asset or continuing to use it, so the loss should reflect the better option.
For most assets yes, if the recoverable amount recovers — but never for goodwill under IFRS.