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QuestionsCategory: Financials QuadrantWhat is impairment gain / losses, write-offs
Yik hong Soo asked 1 year ago

Dear Admin, 
Do you mind to explain to me in detail, what actually is impairment gain / losses ? 
If we included this into the Net Profit, how does this impact us from reviewing a company ?
Thank you
Soo
 

2 Answers
Jieren Zheng answered 1 year ago

During the annual audit, auditors will “test” the asset for impairment, which usually means reducing the value of the asset based what is reflected currently (such as previous cashflow projections against the current status).
Impairment is not a cash transaction like depreciation, so it might hide good earnings otherwise.

Victor Chng replied 1 year ago

Thanks JR

Jieren Zheng replied 1 year ago

Welcome!

Victor Chng answered 1 year ago

Hi Yik Hong,

It is as what Jieren had mentioned.

To add on, impairment will affect the earnings but it is one off item so you have to add it back to reflect the real earning power of the company.