Under what circumstances does Ben Jerrys review its fixed assets for impairment?
Ben_Jerrys Franchise · 2025 FDDAnswer from 2025 FDD Document
. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its franchisees.
(e) Inventories
Inventories are stated at the lower of cost or net realizable value. The Company costs inventory utilizing First In First Out (FIFO).
(f) Fixed Assets
Fixed assets are carried at cost less accumulated depreciation and amortization. Depreciation, including amortization of leasehold improvements, is computed using the straight-line method over the shorter of the estimated useful lives of the related assets or lease term. Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated
Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(Dollars in Thousands)
by that asset or asset group to its carrying amount.
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 reviews its fixed assets for impairment whenever events or changes in circumstances suggest that the carrying amount of an asset may not be recoverable. This means that if there's an indication that an asset's value has declined significantly, Ben Jerrys will assess whether the asset's book value (the original cost less accumulated depreciation) can still be justified by its future cash flows.
If such a review is triggered, Ben Jerrys first compares the undiscounted cash flows expected to be generated by the asset to its carrying amount. If the carrying amount is not recoverable on an undiscounted cash flow basis, Ben Jerrys recognizes an impairment. The impairment is the difference between the asset's carrying amount and its fair value. Fair value is determined using valuation techniques such as discounted cash flow models, quoted market values, and third-party appraisals.
For prospective franchisees, this accounting practice is important because it affects the reported value of Ben Jerrys's assets and, consequently, its financial health. While the 2025 FDD states that no events or circumstances required asset impairment testing for the years ended December 31, 2024 and 2023, understanding the conditions under which impairment reviews occur helps franchisees assess the company's financial statements and evaluate potential risks related to asset values. Franchisees may want to inquire about the company's specific policies and procedures for identifying and assessing impairment indicators to gain further insight into their financial management practices.