Under what circumstances does Bumper Man test its long-lived assets for recoverability?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
btful accounts, deducted against trade accounts receivable to properly reflect the realizable value is $159,129 at December 31, 2024, $129,645 at December 31, 2023 and $120,787 at December 31, 2022.
Depreciation and Amortization
Depreciation is provided principally on the straight line method over the estimated useful life of the assets, which are generally from two to five years. Amortization is provided on the straight line method over the estima
Source: Item 23 — RECEIPTS (FDD pages 45–180)
What This Means (2025 FDD)
According to Bumper Man's 2025 Franchise Disclosure Document, the auditor's report included in the financial statements does not explicitly detail the specific circumstances under which Bumper Man tests its long-lived assets for recoverability. However, the document does mention the company's policies on depreciation and amortization. Depreciation is calculated using the straight-line method over an estimated useful life of two to five years for most assets, while amortization uses the straight-line method over 15 years. Depreciation and amortization expenses totaled $25,791 in 2024, $40,880 in 2023, and $42,763 in 2022.
Given the absence of specific details regarding impairment testing, a prospective Bumper Man franchisee should inquire directly with the franchisor about their policies and procedures for assessing the recoverability of long-lived assets. Understanding these policies is crucial for assessing the potential financial impact if assets become impaired and require write-downs.
Understanding the criteria Bumper Man uses to determine when an asset's value may be impaired can help a franchisee better anticipate potential financial risks. This information is essential for making informed investment decisions and managing the financial health of the franchise.