Final answer:
When revalued fixed assets become impaired, it means their value has decreased below their carrying amount. This can happen due to various reasons such as economic changes or physical damage. Impairment results in recognizing a loss and reducing the carrying amount of the impaired asset.
Step-by-step explanation:
When revalued fixed assets (FA), such as property, plant, and equipment, become impaired, it means that their value has decreased below their carrying amount. This impairment could be due to various reasons such as economic changes, technological advancements, or physical damage. When an impairment occurs, the entity must recognize a loss by reducing the carrying amount of the impaired asset and recording an impairment loss in its financial statements.
For example, let's say a company revalued its building to a higher value based on an appraisal. However, due to a recession, the demand for office space decreases, and the building's value declines. In this case, the revalued fixed asset (the building) would become impaired because its value has decreased below the carrying amount.