What was the reported value of goodwill as an asset acquired by 360 Painting?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
n transaction costs on the consolidated statements of operations.
In accordance with guidance issued by the FASB for business combinations, the purchase price was allocated to the assets acquired and liabilities assumed based
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 FDD, 360 Painting reported goodwill of $1,635,000 as an asset acquired. This figure is part of a larger acquisition where total assets acquired amounted to $6,825,000, with intangible assets valued at $5,190,000. The liabilities assumed in this acquisition were ($75,000), resulting in a total purchase price of $6,750,000.
Goodwill, in this context, represents the excess of the acquisition costs over the fair value of the assets and liabilities acquired. It is specifically related to intangible assets that do not qualify for separate recognition. The FDD states that this identified goodwill is expected to be deductible for tax purposes, which could provide a financial benefit to 360 Painting.
It's important to note that goodwill is not amortized but is tested for impairment annually. 360 Painting has the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The company performed a qualitative impairment test for goodwill as of December 31, 2024 and 2023 and determined that the fair value of goodwill exceeds the carrying value, requiring no further analysis. This indicates that 360 Painting believes the value of the acquired assets is being maintained.
For a prospective franchisee, understanding how 360 Painting manages and values its goodwill can provide insight into the company's financial strategies and the potential long-term value of its acquisitions. It also highlights the importance of intangible assets in the franchise system.