Once an asset is impaired,

A) annual depreciation expense is the same
B) accumulated depreciation needs to be adjusted
C) subsequent years' depreciation expense is based upon changes in the asset's fair value
D) the reduced book value is used to compute future years' depreciation

Impaired Asset

An asset that has a market value significantly below its carrying amount on the balance sheet, indicating that recoverable amount is less than its book value, necessitating a write-down.

Depreciation Expense

The monetary value reduction in an asset's cost over its useful life due to wear and tear, age, or obsolescence.

Book Value

The net value of an asset according to its balance sheet account balance, calculated as the original cost minus accumulated depreciation.