Under FAS 142, the fair value of an asset is compared to its book value such as goodwill. The measurement of fair importance will be the range at which an asset might be sold in an "arm length" transaction in between willing and unrelated parties. If the book significance is below the fair importance assessment, there are going to be no impairment loss. If the fair significance is below the book value, the asset is impaired and also the company have to write down the asset.
The impact of this rule on financial statements will vary from business to company. For example, companies that have made acquisitions and have goodwill on their balance sheets will no longer be forced to consume normal charges against their earnings for goodwill amortization associated in the purchase. Being a result, their reported income must go up.
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