A journal entry which has a book value, or recorded value, which is lower than its actual market value is referred to as an Impaired Asset Journal Entry. In other words, this is an accounting entry which records the reduction in value of an asset due to certain market conditions or events. By recording these impairments, businesses are able to accurately report their assets, liabilities and shareholders’ equity in financial statements and other reporting documents. By properly recording these journal entries, companies can effectively manage budget and cash flow allocations, while also ensuring they remain compliant with applicable accounting standards.