How does Bojangles initially measure goodwill in a business combination?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
We account for business combinations using the acquisition method. As of the acquisition date, the acquirer recognizes, separately from goodwill, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. Goodwill is initially measured at cost, being the excess of the cost of acquisition over the fair value of the net identifiable assets acquired and liabilities assumed. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any noncontrolling interest in the acquiree. If the cost of acquisition is lower than the fair value of the net identifiable assets, the difference is recognized in profit or loss. Acquisition costs are expensed as incurred.
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, the company accounts for business combinations using the acquisition method. Goodwill, a key intangible asset, is initially measured at cost. This cost is determined by calculating the excess of the acquisition cost over the fair value of the net identifiable assets acquired and liabilities assumed.
The cost of the acquisition itself is measured as the aggregate of the consideration transferred, based on its fair value on the acquisition date, and the amount of any noncontrolling interest in the acquired entity. This means Bojangles considers all forms of payment or assets given up in the acquisition, along with the value of any minority ownership stake not being acquired.
If the cost of the acquisition turns out to be lower than the fair value of the net identifiable assets, the difference is recognized as a profit or gain. Furthermore, Bojangles expenses acquisition costs as they are incurred, meaning these expenses are recognized in the accounting period they happen rather than being capitalized as part of the asset's cost.