This report delves into the intricacies of asset impairment as defined by Australian Accounting Standards (AASB 136) and International Accounting Standards 36. It elucidates the factors contributing to asset impairment, such as technological advancements and economic shifts, emphasizing the critical role of the cost model in determining impairment losses. The report contrasts the fair value model for investment assets with the revaluation model for assets used in production, highlighting how these models affect impairment recognition. A detailed calculation example illustrates the process of determining impairment loss, differentiating between assets held for use and those held for disposal. Furthermore, the report discusses the guidelines set by the Australian Securities and Investments Commission (ASIC) for estimating recoverable amounts and the accounting treatment of impairment losses, ensuring that they are accurately reflected in the income and profit or loss account, without affecting cash flow. References to relevant academic literature are provided to support the analysis.