Loss on Impairment of Assets is an accounting term which refers to the loss that occurs when an asset’s fair market value has decreased due to external factors such as wars, a decrease in demand, or changes in the economy. When this happens, the business must recognize and record the losses associated with the impairment – possibly resulting in a reduced net income or a net loss for the period. It’s important to note that this loss should not be confused with depreciation, which is a normal and expected decline in value of an asset due to wear and tear over time. To prevent potential losses associated with impairment, businesses can use proactive risk management tactics, such as diversifying investments or hedging against foreign exchange rate fluctuation.