Under what circumstances does Bojangles review long-lived assets for impairment?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
Long-lived assets, such as property and equipment, and purchased intangible assets subject to depreciation and amortization, 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 by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, the company reviews long-lived assets for impairment when certain conditions are met. Long-lived assets, which include property, equipment, and purchased intangible assets subject to depreciation and amortization, are assessed for impairment whenever events or changes in circumstances suggest that the asset's carrying amount may not be recoverable.
If such circumstances arise, Bojangles first compares the undiscounted cash flows expected to be generated by the asset to its carrying value. Should the carrying value not be recoverable on an undiscounted cash flow basis, an impairment is recognized. The impairment is equivalent to the extent to which the carrying value exceeds the asset's fair value.
The fair value of the asset is determined through various valuation techniques. These techniques include discounted cash flow models, quoted market values, and third-party independent appraisals, as deemed necessary by Bojangles. This process ensures that the value of the assets on the company's books accurately reflects their current market value and potential for future revenue generation.