When does Ben Jerrys perform the annual test for impairment of indefinite-lived intangible assets?
Ben_Jerrys Franchise · 2025 FDDAnswer from 2025 FDD Document
ctively.
(4) Intangible Assets
Intangible assets represent franchise territory rights owned by the Company in the states of California and North Carolina. These territory rights are considered to have indefinite-lives and are included in intangible assets on the consolidated balance sheets.
The territory rights are indefinite by nature, and as such there are no costs incurred by the Company to renew or extend the terms.
The Company performs the annual test for impairment of these indefinite-lived intangible assets as of December 31. The impairment test for indefinite-lived intangible assets involves comparing the fair value of
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(Dollars in Thousands)
such assets with their carrying value, with any excess of carrying value over fair value recorded as an impairment charge. To determine fair value for indefinite-lived intangible assets, the Company uses the discounted cash flows that the asset or asset group can be expected to generate in the future. This valuation method requires management to project revenues, expenses, and cash flows over a multi-year period, as well as determine the weighted average cost of capital to be used as a discount rate. Significant management judgment is involved in preparing these estimates. Changes in projections or estimates could significantly change the estimated fair value of the indefinite-lived intangible assets.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 89–133)
What This Means (2025 FDD)
According to Ben Jerrys's 2025 Franchise Disclosure Document, the company conducts its annual test for impairment of indefinite-lived intangible assets as of December 31. These intangible assets primarily consist of franchise territory rights held by Ben Jerrys in California and North Carolina. These rights are considered to have indefinite lives, meaning Ben Jerrys does not amortize them but instead assesses them for impairment annually.
The impairment test involves comparing the fair value of these intangible assets with their carrying value. If the carrying value exceeds the fair value, Ben Jerrys records an impairment charge. To determine fair value, Ben Jerrys uses discounted cash flows, which requires management to project revenues, expenses, and cash flows over several years and determine a weighted average cost of capital to use as a discount rate.
This process involves significant management judgment, and changes in projections or estimates could significantly impact the estimated fair value of these assets. If management uses different assumptions or if future conditions differ from those anticipated, the operating results and balances of indefinite-lived intangible assets could be affected by impairment charges. As of December 31, 2024, and 2023, the carrying value of these assets was $705,000, and there was no impairment recorded for those years.