How does Beard Papas measure the recoverability of assets that are intended to be held and used?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted and without interest charges) expected to be generated by the asset. If such 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 the estimated fair value of the assets. Assets to be disposed of by sale are reported at the lower of the carrying amount or estimated fair value less costs to sell. For the years ended December 31, 2023 and 2022, no impairment is recognized.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to the 2025 Beard Papas FDD, the company reviews long-lived assets, including intangible assets subject to amortization, for impairment when events or changes in circumstances suggest that the asset's carrying amount may not be recoverable. This means Beard Papas assesses whether the recorded value of its assets on the balance sheet still reflects their true economic value.
To determine recoverability, Beard Papas compares the carrying amount of the asset to the future net cash flows expected to be generated by the asset. These cash flows are undiscounted and do not include interest charges. This comparison helps Beard Papas determine if the asset will generate enough cash to justify its recorded value. If the asset is considered impaired, the company recognizes an impairment loss. This loss is measured by the difference between the asset's carrying amount and its estimated fair value. The fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
For assets intended to be disposed of by sale, Beard Papas reports them at the lower of their carrying amount or estimated fair value, less any costs to sell. This ensures that assets held for sale are not overvalued on the balance sheet. For the years ended December 31, 2023, and 2022, no impairment was recognized, indicating that Beard Papas's assets were not considered impaired during those periods.