How does Bombs Away define impairment of long-lived assets?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company reviews long-lived assets for impairment whenever events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is present when the sum of the undiscounted estimated future cash flows expected to result from use of the assets is less than carrying value. If impairment is present, the carrying value of the impaired asset is reduced to its fair value. As of December 31, 2023, no impairment loss has been recognized for long-lived assets.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the company reviews long-lived assets for impairment when events or circumstances suggest that the carrying value of those assets may not be fully recoverable. Impairment is determined to be present if the sum of the undiscounted estimated future cash flows expected from the use of the assets is less than their carrying value.
If such impairment is found, Bombs Away will reduce the carrying value of the impaired asset to its fair value. As of December 31, 2023, Bombs Away did not recognize any impairment loss for long-lived assets.
For a Bombs Away franchisee, this accounting practice is important because it affects the company's reported financial health. If Bombs Away were to recognize significant impairment losses, it could signal underlying problems with the assets and the overall financial stability of the company. However, the FDD states that no impairment loss has been recognized as of December 31, 2023.