[codexb]

It's a way to effectively re-allocate losses into the current quarter/year before they are actually realized. For example, if I bought something for a high price and won't sell it until a year later, those losses won't show up until I sell them. I can use impairment to re-value those assets and "realize" those losses right now.

The way this is generally used in practice is that when a company is having a bad year or quarter and knows they are going to report losses, they will tack on a bunch of impairment so that future quarters and years don't look so bad. Having a bad quarter followed by mediocre quarters is much worse than having a very bad quarter followed by good or okay quarters.

It's not entirely nefarious, though. If a company is operating with good fundamentals and finances, you don't want that constantly being hidden by a bad decision or massive loss that really happened years earlier.