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 ?
Finance minister, Peer Steinbruck, is expected to reveal by the end of April as to how he intends to help German banks separate unwanted or heavily impaired assets from their balance sheets.
Banks in Hong Kong and Singapore are well ahead of their regional rivals in terms of accounting for impaired assets, with their respective average ratios of gross nonperforming loans (NPLs) to total loans being 3.
If no active market exists but such a market exists for similar assets, the selling prices in that market may help in estimating the fair value of the impaired assets.
According to the complaint, the true facts omitted from the Registration Statement and Prospectuses were: (a) The Company's loans, leases, CDOs, and commercial mortgages backed securities were impaired to a far greater extent than disclosed, (b) Defendants failed to properly record losses for impaired assets, (c) The Company's internal controls were inadequate to prevent the Company from improperly reporting its impaired assets, and (d) The Company's capital base was inadequate relative to the magnitude of impaired assets.
The action from the central bank was prompted by apprehensions over rising levels of arrears and impaired assets among such organisations.
The lowering of Bank of Tokyo-Mitsubishi's rating reflects further deterioration in the financial profile of Bank of Tokyo-Mitsubishi -- and the Japanese banking system, in general -- stemming from the high and growing level of impaired assets, insufficient core earnings to meet credit costs, and widening shortfalls in capital to offset losses imbedded in impaired assets and fund ongoing operations.
But Taoiseach Brian Cowen said transferring impaired assets to Nama would allow the banks to strengthen their balance sheets and reduce levels of bad debts.
Commenting on the results, Naveed Khan, Managing Director, said, "ABC Islamic Bank was able to maintain a positive operating result in the first half of 2010 despite de-risking of the balance sheet and provisioning on impaired assets.
The bank said that the tie up would help in the better price recovery of impaired assets.
Although SFAS 121 has provided some much-needed guidance for situations involving impaired assets and resulting loss recognition, many of its provisions allow the use of management judgment in estimating and applying the rules.
The IASC issued two exposure drafts on impaired assets and lease accounting that, if approved, will be part of the core set of standards.
CREL CDO asset managers reported approximately $105 million in realized losses from the disposal of credit impaired assets in the January reporting period.