Under what circumstances will Bumble Roofing test goodwill for impairment between annual tests?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
Goodwill is not amortized, but is tested for impairment using a fair value approach. If the fair value of the reporting unit is less than its carrying value, or if the fair value of the goodwill has been diminished, an impairment loss would be recorded to the extent of that difference. The Company tests for impairment as of September 30 annually. Goodwill will be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value or diminish the fair value of the goodwill. Management believes there has been no impairment of intangible assets during 2024, 2023, or 2022.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 53)
What This Means (2025 FDD)
According to the 2025 FDD, Bumble Roofing conducts annual goodwill impairment tests as of September 30th. However, interim testing may be necessary if certain events or changes in circumstances occur.
Specifically, Bumble Roofing will test for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. This also applies if the changes diminish the fair value of the goodwill.
In practice, this means that a significant negative event impacting Bumble Roofing's financial performance or market position could trigger an immediate impairment test. This could include a major economic downturn, loss of a key customer, or significant changes in the roofing industry. If the test reveals that the goodwill's fair value has declined below its carrying value, Bumble Roofing would record an impairment loss, reflecting the reduced value of the intangible asset.