ImpairmentPrüfung

ImpairmentPrüfung is a German term that translates to "impairment test" or "impairment review" in English. It is a process used in accounting to determine if an asset's carrying amount on a company's balance sheet is greater than its recoverable amount. If the carrying amount exceeds the recoverable amount, an impairment loss must be recognized, reducing the asset's value to its recoverable amount.

This testing is typically performed when there are indicators of impairment, such as a significant decline in an asset's market value, adverse changes in the physical condition of an asset, or unfavorable economic or legal changes affecting the asset. The recoverable amount is generally the higher of an asset's fair value less costs to sell or its value in use. Value in use is calculated by discounting future cash flows expected to be generated by the asset.

ImpairmentPrüfung is a critical component of financial reporting, ensuring that assets are not overvalued on the balance sheet. It impacts a company's profitability and net worth. The specific rules and methodologies for impairment testing are often dictated by accounting standards, such as International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP) in the United States. Companies must maintain thorough documentation of their impairment testing procedures and conclusions.