According to 360 Painting's FDD, is goodwill amortized?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
Goodwill represents the excess of acquisition costs over the fair value of assets and liabilities acquired, including specifically identified intangible assets. Goodwill is not amortized but is tested for impairment annually as of the last day of each fiscal year in line with guidance prescribed by FASB ASU 2021-03 "Accounting Alternative for Evaluating Triggering Events" and evaluated if the facts and circumstances at year end indicate if any triggering event existed.
In conducting impairment testing, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company performs a qualitative assessment and determines that the carrying value more likely than not exceeds the fair value, then the quantitative impairment test is performed, otherwise no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. The ultimate outcome of the goodwill impairment assessment will be the same whether the Company chooses to perform the qualitative assessment or proceed directly to the quantitative impairment test. The Company chose to perform a qualitative impairment test for goodwill as of December 31, 2024 and 2023. The Company determined the fair value of goodwill exceeds the carrying value and no further analysis is required as of December 31, 2024 and 2023.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 360 Painting FDD, goodwill is not amortized. Instead, 360 Painting tests it for impairment annually as of the last day of each fiscal year, following the guidelines of FASB ASU 2021-03, "Accounting Alternative for Evaluating Triggering Events." They also evaluate it if year-end circumstances suggest a triggering event.
360 Painting has the option to first assess qualitative factors to determine if events or circumstances indicate that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment suggests that the carrying value exceeds the fair value, a quantitative impairment test is performed. However, 360 Painting can choose to skip the qualitative assessment and proceed directly to the quantitative test.
The FDD states that the outcome of the goodwill impairment assessment will be the same whether 360 Painting chooses to perform the qualitative assessment or proceeds directly to the quantitative impairment test. For the years ending December 31, 2024 and 2023, 360 Painting performed a qualitative impairment test for goodwill and determined that the fair value of goodwill exceeds the carrying value, requiring no further analysis.