Asset Impairment Loss is a term used in business accounting to describe when the value of an asset drops below the cost at which it was originally recorded on the balance sheet. This event can happen because of external market changes or due to internal factors such as inefficient management, damaged goods, or obsolescence. Regardless of its cause, when this loss occurs, it must be reported to accurately depict the company’s financial health. The loss is recognized by adjusting the asset’s carrying amount so that its new net book value reflects the current market value instead. Asset Impairment Losses are important indicators of a company’s performance and should not be ignored.