Impaired Asset


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Impaired Asset

An asset with a market value less than its value listed on the company's records, especially when the value is unlikely to recover. The cash flow an impaired asset will generate is less than the difference between its market value and its book value. A company must write down the value of impaired assets once per year. Common impaired assets include accounts receivable, long-term assets, and, especially, good will.
References in periodicals archive ?
This impaired asset measure, which is specifically targeted at real estate assets, is therefore key to cleaning up Irish banks' balance sheets.
As of the end of June 2009, the group has significantly written down most of its impaired assets, including the ABCP and residential mortgage-backed securities (RMBS), which Mega Bank bought from the trustee of several collateralized bond obligation (CBO), given its role as a credit-impaired asset put provider.
In addition to impaired asset data, Chart 9 presents capital ratios across the major banks as another measure of bank condition.
The FASB views this decision to use the impaired asset as being equivalent to a purchase decision.
Indeed, all financial institutions responded in a similar manner to this economic environment of deleveraging and impaired asset quality regardless of whether they were subject to risk-based capital standards.
The FASB defended itself by concluding that a company's decision to continue operating rather than sell an impaired asset essentially is a capital investment decision-- management believes operating the asset is more beneficial than selling it.
121 requires finding the expected net cash flows for an asset or a group of assets at the time impairment is identified, only the timing of cash flows and the appropriate discount rate remain to be identified at the time a potentially impaired asset, with no market value, is subsequently examined.
In a nutshell, FAS 121 is now the guideline for all companies to use when taking a write-off on an impaired asset.
If before issuance of the financial statements it appears probable an environmental exposure has resulted in a liability or an impaired asset as of the balance sheet date and the amount of loss can be reasonably estimated, the loss is accrued by a charge to income and appropriate disclosure is provided.
3bn, a liquidity contribution of EUR350m and an impaired asset measure comprising a guarantee of nearly EUR2.
European competition commissioner, Joaquin Almunia, said, 'This impaired asset measure, which is specifically targeted at real estate assets, is key to cleaning up Irish banks' balance sheets.