3. Difference between Impairment and Depreciation?

Question

Accepted Answer

Impairment is a sudden decrease in the value of an asset, while depreciation is a gradual decrease in the value of an asset over time.

Impairment is usually caused by external factors such as economic downturns or changes in market conditions.
Depreciation is a result of wear and tear, obsolescence, or the passage of time.
Impairment is recognized as a loss on the income statement, while depreciation is recognized as an expense.
Impairment is usually a one-time event, while depreciation is a recurring expense.
Examples of impairment include a sudden drop in the value of a company's stock or a natural disaster that damages a company's property.
Examples of depreciation include the decrease in value of a car over time or the decrease in value of a building due to wear and tear.

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