Asset impairments are a phenomenon usually identified during an accounting period wherein a listed asset on the balance sheet of a business has declined in value. This means that the reported value of the asset (or assets) is lower than its carrying cost, or its total expected economic benefit. This could be due to such factors as physical damage, environmental issues, changes in market conditions, obsolesce, or legal considerations. Impairment is one of the most important concepts under the Generally Accepted Accounting Principles (GAAP), and it’s essential to know when it applies and how it affects your bottom line.