To what value is the impaired asset reduced by Bombs Away?
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 suggest that the carrying value of those assets may not be fully recoverable. Impairment is determined by comparing the sum of undiscounted estimated future cash flows expected from the asset's use to its carrying value.
If impairment is present, Bombs Away reduces the carrying value of the impaired asset to its fair value. The FDD states that as of December 31, 2023, no impairment loss has been recognized for long-lived assets.
For a prospective franchisee, this means that Bombs Away assesses its assets regularly and adjusts their value to reflect their actual worth. The fact that no impairment loss was recognized in 2023 suggests that Bombs Away's assets were not devalued during that period.