Impairment charge

An impairment charge is a write-down a company records when the value of an asset on its balance sheet, such as goodwill or property, plant and equipment, is judged to be worth less than what it is currently carried at. It is a non-cash expense that reduces net income in the period it is recorded.

Goodwill impairment is one of the most common types, and it usually signals that a past acquisition has not performed as well as expected when the company originally paid for it. A large impairment charge can distort profitability in a single period without reflecting anything about the company's ongoing cash-generating ability, which is why analysts often look past it when judging underlying performance.