Impaired Asset

Impaired = it doesn't work, at least not how it should have worked. So where does this come out in FinanceLand? Well, mostly in accounting tales of woe.

A given company spends $100 million to buy another company who, they think, will add tons of value to the acquiror. But, in fact, half the company's factory plant things don't really work, at least not to the efficiency initially ascribed. So the value of the plant,which had been estimated to be $32 million, has to be written down on the balance sheet as an impaired asset, now worth just $20 million, as $12 million in "optimism" was discovered well after the purchase and misery that followed.