Impairment Test
/ɪmˈpɛərmənt tɛst/
Definitions
- (n.) A financial accounting procedure to determine whether a company's asset has suffered a loss in value, requiring recognition of impairment loss in financial statements.
The impairment test revealed that the goodwill on the balance sheet was overstated and required adjustment.
- (n.) A legal or regulatory assessment to evaluate the reduction in value or utility of an asset or right, often in contexts such as intellectual property or fixed assets.
The impairment test established that the trademark's value had diminished due to market changes.
Forms
- impairment test
- impairment tests
Related terms
See also
Commentary
Typically conducted annually or when triggering events occur, the impairment test ensures financial statements reflect accurate asset values and comply with relevant accounting standards.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.