When does Bft evaluate the recoverability of intangible assets with finite lives?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
results of operations during the period of sale or disposal.
Intangible assets – Intangible assets consist of indefinite and definitive-lived trademarks and web design and domains.
The Company tests for impairment of trademarks with an indefinite life annually or sooner whenever events or circumstances indicate that trademarks might be impaired. The Company first assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of the trademarks is less than the carrying amount. In the absence of sufficient qualitative factors, trademark impairment is determined utilizing a two-step analysis. The two-step analysis involves comparing the fair value to the carrying value of the trademarks. The Company determines the estimated fair value using a relief from royalty approach. If the carrying amount exceeds the fair value, the Company impairs the trademarks to their fair value. Trademark impairments of $251 and $0 were record
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the company assesses the recoverability of intangible assets with finite lives when specific events or changes in circumstances suggest that the asset's value may be impaired. This involves reviewing forecasted undiscounted operating cash flows to determine if the carrying value of the assets is recoverable.
If the analysis indicates that the carrying value is not recoverable, Bft reduces the asset's value to its fair value. The fair value is determined by discounting future cash flows. The difference between the carrying value and the fair value is recognized as an impairment loss in the consolidated statement of operations.
For example, in 2024, Bft recognized an impairment loss of $1 related to web design and domain intangible assets associated with the AKT brand due to the brand's wind-down. Additionally, in 2023, Bft recognized impairments related to trademarks of the Row House ($127) and Stride ($53) brands because their carrying values were deemed unrecoverable.