In the audit of Benihana, what specific actions were taken to test long-lived restaurant assets for indications of impairment?

According to Benihana's 2024 Franchise Disclosure Document, the audit procedures related to the evaluation of long-lived asset impairment indicators included several key steps. The auditors tested the effectiveness of internal controls over the company's long-lived asset impairment indicator evaluation. They also evaluated the reasonableness of the company's evaluation of impairment indicators. This evaluation involved testing long-lived restaurant assets for possible indications of impairment, specifically searching for locations with current period losses or projected losses.

Additionally, the auditors performed inquiries of management regarding the process and assumptions used to identify potential indicators of impairment. They assessed the consistency of these assumptions with evidence obtained in other areas of the audit. The auditors also inspected minutes of the board of directors, the company's public statements, operating plans, and industry data to identify any evidence that might contradict management's assumptions.

Finally, the audit procedures included testing the completeness and accuracy of the underlying source information used by management to identify quantitative indicators of impairment. These procedures are designed to ensure that Benihana is accurately assessing the value of its long-lived assets and that any potential impairments are recognized in a timely manner. This is a critical area of focus due to the significant assumptions and judgments involved in determining whether the carrying amounts of these assets are recoverable.