In business valuation analysis, Impairment relates to depreciation of the fair market value of an intangible asset. An intangible asset is classified impaired when the carrying value of the asset exceeds its recoverable amount. When an intangible asset is impaired, an impairment test is required to align the carrying value with the recoverable amount. Through an impaired asset, business valuation analysts adjust the carrying value downwards to equate with the recoverable amount if that asset is to be used or sold after the impairment testing.