Final answer:
Impairment is the term used when an asset is written down due to a significant decline in its recoverable value. It is not to be confused with depreciation or amortization, which spread the cost of an asset over time.
Step-by-step explanation:
When an asset has a significant decline in value and is written down, this is called impairment. This concept is different from depreciation, which is the allocation of the cost of an asset over its useful life, or amortization, which is similar but typically refers to spreading the cost of intangible assets. Impairment reflects a reduction in the recoverable value of an asset, often due to changes in market conditions or the asset becoming obsolete or damaged. It is an immediate recognition of a decline in the asset's value. Appreciation, on the other hand, refers to an increase in value of an asset over time.