Under what condition does impairment occur according to accounting standards?

Impairment occurs when the carrying amount of an asset exceeds its recoverable amount. This concept is fundamental in accounting, as it ensures that assets are not overstated on the balance sheet. The recoverable amount is defined as the higher of an asset's fair value less costs to sell and its value in use, which is the present value of its future cash flows expected to be derived from the asset.

When an asset is impaired, it must be written down to its recoverable amount, reflecting a more accurate value that can be realized if the asset were to be sold or used in operations. This procedure adheres to the principle of conservatism in accounting, promoting the recording of an asset at a value that is not higher than what can be recovered.

In contrast, the other options do not align with the definition and conditions under which impairment is recognized. For example, an increase in future cash flows could indicate a strengthening of the asset's value rather than impairment. Liquidation of assets pertains to their disposal, which may not necessarily involve impairment. Lastly, revenues exceeding expenses relate to profitability and do not directly pertain to the valuation of an individual asset relative to its recoverable amount.