Writing an asset down when it can no longer earn its value
An impairment writes down a plant, a subsidiary or goodwill once it is judged unable to earn what the books say it is worth. The shortfall lands as a loss in that period, which is how a company with a profitable core business can still post a net loss. No cash leaves the company; it is a record that a past investment did not work out.
A subsidiary bought for $10 billion but now judged worth $6 billion produces a $4 billion impairment loss.
For learning, not investment advice. Decisions are your own.
StockFit · TrueNorthLabs Inc.