Under what circumstances does Beard Papas review long-lived assets for impairment?
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, 2024 and 2023, no impairment was recognized.
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
According to the 2025 FDD, Beard Papas reviews long-lived assets, including intangible assets subject to amortization, for impairment when certain conditions are met. Specifically, a review is triggered whenever events or changes in circumstances suggest that the carrying amount of an asset may not be recoverable. This means that if there are indicators that the recorded value of an asset on the company's books is higher than what can realistically be recovered from it, Beard Papas will assess the asset for impairment.
To determine if an asset's value is recoverable, 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 considered without discounting and before accounting for interest charges. If this assessment reveals that the asset is impaired, the company will recognize an impairment loss. This loss is calculated as the difference between the asset's carrying amount and its estimated fair value.
For assets that are intended to be disposed of through sale, Beard Papas reports them at the lower of their carrying amount or their estimated fair value, after deducting the costs associated with selling the asset. The FDD states that for the years ending December 31, 2024 and 2023, no impairment was recognized. This suggests that during those periods, no assets were deemed to have a carrying amount that was not recoverable based on the company's assessment criteria.