Final answer:
Recognizing impairment on an intangible asset involves reducing the value of the asset on the balance sheet due to a decrease in its fair value.
Step-by-step explanation:
Recognizing impairment on an intangible asset is an example of an adjusting entry that involves reducing the value of the intangible asset on the balance sheet. This is typically done when the asset's fair value is less than its carrying value (cost). The impairment is recorded as an expense on the income statement and simultaneously reduces the value of the asset on the balance sheet.