Under what accounting standard does Atwell Suites account for the Master License Agreement?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company accounts for the Agreement in accordance with Accounting Standards Codification (ASC) Topic 350-30, General Intangibles Other than Goodwill. In accordance with ASC 350-30-35-18, indefinite-lived intangible assets are reviewed annually for impairment. The Company has not recognized any impairment losses in respect of the Agreement for the years ended December 31, 2024, 2023, and 2022.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites' 2025 Franchise Disclosure Document, the company accounts for the Master License Agreement in accordance with Accounting Standards Codification (ASC) Topic 350-30, specifically General Intangibles Other than Goodwill. This accounting standard dictates how Atwell Suites handles and reports intangible assets that do not have a definite lifespan.
ASC 350-30-35-18 requires that indefinite-lived intangible assets, like the Master License Agreement, undergo an annual review for impairment. This means Atwell Suites must assess each year whether the value of the agreement has declined. If the value is deemed to have decreased, an impairment loss must be recognized, reducing the asset's book value on the balance sheet.
The FDD states that Atwell Suites has not recognized any impairment losses for the Master License Agreement for the years ending December 31, 2024, 2023, and 2022. This indicates that, in the company's assessment, the value of the agreement has been maintained over these past three years. For a potential franchisee, this provides some assurance that the Master License Agreement is considered a stable asset by the company, though it is subject to annual review and potential future impairment.