What was the second amount by which Bonchon determined the carrying amount of software exceeded its fair value?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
ATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**
Software development costs (continued)
and are included in "Property and equipment, net" in the accompanying balance sheets.
Property and equipment
Property and equipment are carried at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are expensed currently, while renewals and betterments that materially extend the life of an
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, during 2023 and 2022, Bonchon determined that the carrying amount of its software exceeded its fair value by two amounts. The second amount by which the carrying amount of software exceeded its fair value was $63,854. Bonchon recognized an impairment loss of this amount, which was included in "Impairment loss on software" in the company's statements of income and changes in member's equity.
This indicates that Bonchon had to write down the value of its software assets because their book value was higher than their actual market value. This can happen for various reasons, such as technological obsolescence or changes in market conditions. No impairment loss was recognized during the year ended December 31, 2024.
For a prospective franchisee, this information highlights the importance of understanding how Bonchon manages its technology assets and the potential risks associated with software investments. While software is crucial for modern business operations, its value can decline rapidly, leading to impairment losses. Franchisees should inquire about Bonchon's software strategy, upgrade plans, and how these costs are managed to avoid unexpected expenses or disruptions.