The biggest resource available to an entity is its labour force and its assets. Assets are both directly and indirectly responsible for generating income for a business. How is this done? - Assets are utilised in creating inventory, which is sold for income, - Assets are used to meet financial obligations in the form of liabilities, and - Assets are themselves sold to directly generate income. A carrying amount represents what management believes something is worth, or how much income is expected to be generated from a given asset. When assets are not capable of serving any of the aforementioned purposes, they are considered to be impaired, which simply entails that it is not likely to be worth what management have measured it at in its accounting records and an appropriate de-valuation adjustment may need to be recognised.