How are long-lived assets to be disposed of reported by Bath Tune Up?

According to Bath Tune Up's 2025 Franchise Disclosure Document, long-lived assets to be disposed of are reported at the lower of their carrying amount or their fair value, less the costs to sell. This accounting practice affects how Bath Tune Up reports its financial position, which in turn could impact a franchisee if they were to sell their franchise or its assets.

The 'carrying amount' refers to the asset's original cost, minus any accumulated depreciation or amortization. 'Fair value' represents the price that would be received to sell the asset in an orderly transaction between market participants. 'Costs to sell' include expenses directly associated with the disposal, such as brokerage commissions, legal fees, and preparation costs.

By reporting the asset at the lower of these two values (less costs to sell), Bath Tune Up ensures that the asset is not overstated on its balance sheet. This approach aligns with standard accounting principles, providing a more conservative and realistic view of the company's financial health. For a franchisee, understanding this accounting method is important for interpreting Bath Tune Up's financial statements and assessing the potential value of assets if they were ever to be sold or disposed of.