Imagine you bought a machine for ₹10 lakhs, and after depreciation its book value (carrying amount) is ₹6 lakhs. But if you tried to sell it today, you'd get only ₹3.5 lakhs — or if you kept using it, the present value of all future cash flows is only ₹4 lakhs. Your balance sheet is lying. AS 28 fixes this by making you write the asset down to what it's actually worth. That's impairment in one line.
The core test: compare the asset's carrying amount with its recoverable amount. If carrying amount is higher, the difference is an impairment loss, charged to the Profit & Loss account immediately. Recoverable amount is the higher of two numbers — (a) Net Selling Price (NSP): what you'd get selling the asset today minus disposal costs, and (b) Value in Use (VIU): the present value of future cash flows the asset will generate, discounted at a pre-tax rate. You pick the higher one because you'd rationally choose whichever option gives you more value.
AS 28 requires you to assess indicators of impairment at every balance sheet date — think falling market values, obsolescence, physical damage, or poor operating results. You don't need to compute impairment every year unless an indicator exists (with one exception: goodwill and intangibles with indefinite life must be tested annually regardless). When a single asset can't generate cash flows independently, you work with a Cash Generating Unit (CGU) — the smallest group of assets that generates independent cash inflows. Impairment loss on a CGU is allocated first to goodwill, then pro-rata to other assets, but no individual asset is written below its own NSP or VIU. One more exam-favourite: reversal of impairment is allowed (except for goodwill — once impaired, never reversed) when the recoverable amount improves, but you can only reverse up to what the carrying amount would have been had no impairment been recognised.