Impairment loss accounting is a process that companies use to assess the value of an asset on their balance sheet. It’s about recognizing when an asset has suffered a permanent impairment – or lost value – and ensuring that this value is properly accounted for in the company’s financial statements. In other words, it’s about making sure that the value of an asset – whether tangible or intangible – is accurately reflected in the books. The recognition of an impairment loss helps companies prevent misstating the value of their assets, which can have a long-lasting impact on their bottom line.