At what level does Benjamin Franklin Plumbing test goodwill for impairment?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
Goodwill represents the excess of acquisition costs over the fair value of assets and liabilities acquired, including specifically identified intangible assets. Commencing on January 1, 2023, the Company adopted the private company alternative accounting approach for the subsequent accounting for goodwill as provided for in ASU 2014-02, Intangibles - Goodwill and Other (Topic 350): Accounting for Goodwill. As such, the Company amortizes goodwill on a straight-line basis over a period of ten years. The accounting alternative requires the Company to make an accounting policy decision to test goodwill for impairment at either the entity level or the reporting unit level. The Company tests goodwill for impairment at the entity level.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to the 2025 Benjamin Franklin Plumbing FDD, the company has adopted a private company accounting alternative for goodwill. As such, goodwill is amortized on a straight-line basis over ten years.
The accounting policy decision requires Benjamin Franklin Plumbing to test goodwill for impairment at either the entity level or the reporting unit level. The FDD states that Benjamin Franklin Plumbing tests goodwill for impairment at the entity level.
This means that when assessing whether the value of goodwill has decreased, Benjamin Franklin Plumbing conducts this assessment at the highest level of the company rather than at the level of individual franchise units or smaller reporting segments. This approach can affect how impairment losses are recognized and reported in the company's financial statements.