Under what circumstances is Basecamp Fitness required to test goodwill for impairment?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company is required to test goodwill for impairment only when a triggering event occurs that indicates the fair value of the Company may be below its carrying amount. Factors that could trigger an impairment test include, but are not limited to, underperformance relative to historical or projected future operating results, significant change in the manner of use of the acquired assets, or the Company's overall business and significant negative industry or economic trends. No triggering events were identified in the years ended December 31, 2024, 2023 and 2022.
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, the company is required to test goodwill for impairment only when a triggering event occurs. This event would indicate that the fair value of the company may be below its carrying amount.
These triggering events include, but are not limited to, underperformance relative to historical or projected future operating results. A significant change in how the acquired assets are used can also trigger a test. Furthermore, the company's overall business performance and significant negative industry or economic trends could necessitate an impairment test.
The FDD states that no such triggering events were identified in the years ending December 31, 2024, 2023, and 2022. This means that during those years, Basecamp Fitness did not see any indicators that would require them to assess whether the value of their goodwill had diminished.