An Impairment Loss refers to the amount by which the carrying amount of an intangible asset exceeds its fair market value (the recoverable amount). The carrying value of an Asset (or carrying amount) is the book value of an asset as recorded in the statement of financial position of a business entity. To validate the value of the intangible asset, an impairment test is conducted and when the carrying amount of the asset exceeds the fair market value (recoverable amount), it indicates the asset is impaired and an impairment loss results. When an intangible asset is impaired, the carrying amount on the books is reduced by the amount of the impairment loss to align with the fair market value which is the recoverable amount.