Under what circumstances does Atwell Suites evaluate property and equipment for recoverability?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company evaluates property and equipment and other long-lived assets for recoverability when changes in circumstances indicate the carrying value may not be recoverable; for example, when there are material adverse changes in projected revenues or expenses, significant underperformance relative to historical or projected operating results, and significant negative industry or economic trends. If indicators of impairment are present, estimated undiscounted future cash flows from related operations are compared with the current carrying values of the long-lived assets. If these assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Fair value is based on estimated discounted future cash flows.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites' 2025 Franchise Disclosure Document, the company assesses the recoverability of property, equipment, and other long-lived assets when certain changes in circumstances suggest that the current carrying value of these assets may not be recoverable. These circumstances include material adverse changes in projected revenues or expenses, significant underperformance relative to historical or projected operating results, and significant negative industry or economic trends.
If any of these indicators of impairment are present, Atwell Suites compares the estimated undiscounted future cash flows from related operations with the current carrying values of the long-lived assets. Should these assets be considered impaired, the recognized impairment is measured by the amount by which the carrying amount of the assets exceeds their fair value. The fair value is determined based on estimated discounted future cash flows.
This evaluation process is crucial for Atwell Suites to ensure that the value of its assets is accurately reflected on its financial statements. For a franchisee, this means that the franchisor is actively monitoring the performance and economic factors that could impact the value of the assets used in the Atwell Suites business. This can provide a level of assurance that the franchisor is taking a proactive approach to managing its assets and responding to changing market conditions.