Impairment of income statements is a process used to test the value of long-lived assets and certain liabilities. It is a way for companies to write off any expenses that are not expected to provide benefits in the future. This can include intangible assets, such as goodwill, or tangible assets such as property, plant, and equipment. When a company determines that an asset has become impaired, it needs to reduce the value of the asset on the income statement. This creates an expense, which reduces profits. By testing for impairments, income statements remain transparent and up-to-date with any changes in the value of a company’s assets.