Indicators of impairments of assets Recognition of losses from impairment of long- lived assets is an effort of declaration of fair value of such assets on a reporting date. An asset is said to be impaired when the carrying amount of the assets at a reporting date exceeds its fair value. The accounting bodies word over as well as the IASB have introduced standards prescribing principles and procedures for measuring the impairment of assets. Statement no.144 issued by FASB represents US GAAP on the issue of impairment of assets. The objective of FASB statement no.144, Accounting for Impairment or Disposal of Long- Lived Assets , is to state impaired assets at no more than their fair values, i.e., recoverable undiscounted future cash flows. A carrying amount is not recoverable if it is greater than the sum of the cash flows expected from the asset’s use and eventual disposal. FASB defines impairment loss as the amount by which the carrying value exceeds an asset’s fair value that is undiscounted . The standard seeks recognition of the impairment loss of long- lived assets. FASB statement no. 144 states that “a long- lived asset (asset group) shall be tested for recoverability whenever events or changes indicate that its carrying amount may not be recoverable” (Para 8 of Statement of Financial Accounting Standards No.144, page 9). Entities should assess the impairment in the long- lived assets on the reporting date. For making such an assessment, entities are required to establish appropriate systems to find out whether long- lived assets have indications of impairment at a particular reporting date. When there are no indications of impairment, entities need not assess the impairment loss. When indications are there entities should assess the value of concerned assets using future cash flows in an effort to find out net fair value of such assets. A few examples of such indicators of impairment of long- lived assets are as under:   * Inventions destroy the market value of earlier acquired assets. For example with the invention of computers the use of typewriters reduced greatly. Thus introduction of computers was an indicator of impairment in value of plants manufacturing typewriters.   * Whenever a new vehicle moves out of a showroom, its market value gets hugely reduced. Thus carrying value of vehicles purchased few days earlier than reporting date would always be much higher than their fair market value on such reporting date.   * Significant changes with an adverse effect on an enterprise. For example steep decline in property prices is a perfect indicator of impairment in value of properties purchased during peak prices.   * Evidence of obsolescence or physical damage of an asset indicates impairment in value of the asset. For example a building damaged in a natural disaster or a fire.   * Permanent construction stoppage of a building due to lack of funds renders the part constructed building impaired.   * Evidence from internal reporting indicating reduced performance of an asset is another example of impairment. It is however not necessary to check every asset for impairment in each reporting period. “A test may be called for when one or more of these events occur:  1. a significant decrease in the market price of long live