What accounting method does Basecamp Fitness use for business combinations, and what does it require?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company accounts for business combinations using the acquisition method of accounting, which requires that the assets acquired and the liabilities assumed are measured at fair value at the date of acquisitions. The purchase price of the acquisitions is allocated to the assets acquired including amortizable intangible assets and the liabilities assumed in the amounts equal to the estimated fair value of each asset and liability. Any excess of purchase price over fair value of net
assets is recorded as goodwill. This allocation process requires use of estimates and assumptions, including estimates of future cash flows to be generated by the acquired assets. The Company applies the business combination guidance for acquisitions which meet the definition of a business in accordance with the revised guidance in ASU 2017-01, Business Combinations, which clarifies the definition of a business.
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, the company uses the acquisition method of accounting for business combinations. This method requires that assets acquired and liabilities assumed are measured at fair value on the acquisition date.
The purchase price in an acquisition is allocated to the acquired assets, including amortizable intangible assets, and the assumed liabilities. These are recorded at their estimated fair values. Any amount by which the purchase price exceeds the fair value of the net assets is recorded as goodwill.
This allocation process necessitates the use of estimates and assumptions, particularly regarding future cash flows expected from the acquired assets. Basecamp Fitness applies business combination guidance for acquisitions meeting the definition of a business, in accordance with the revised guidance in ASU 2017-01, Business Combinations, which clarifies the definition of a business.