For Bw Premier Collection, under what condition is a quantitative impairment test performed?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
testing is required. If the conclusion is that the fair value of the assets is more likely than not less than its carrying value, then a quantitative impairment test is performed. For intangible assets, if the carrying value is greater than the fair value of the assets, an impairment charge is recognized for this excess. The Company may elect to forgo the qualitative assessment and move directly to the quantitative impairment tests for goodwill and other intangible assets. The Company determines the fair value of its reporting units and intangible assets using income and market methods.
Source: Item 23 — Receipts (FDD pages 54–203)
What This Means (2025 FDD)
According to the 2025 Bw Premier Collection Franchise Disclosure Document, a quantitative impairment test is performed if the fair value of assets is more likely than not less than their carrying value. Bw Premier Collection evaluates the potential impairment of goodwill and other intangible assets annually. The company may first assess qualitative factors to determine if the fair value of a reporting unit or intangible assets is less than its carrying amount.
If the initial qualitative assessment suggests that the fair value of the assets is likely less than their carrying value, Bw Premier Collection will then proceed with a quantitative impairment test. This test involves a more detailed analysis to determine the actual fair value of the assets. For intangible assets, if the carrying value is indeed greater than the fair value, an impairment charge is recognized for the excess amount.
However, Bw Premier Collection has the option to skip the qualitative assessment altogether and directly perform quantitative impairment tests for goodwill and other intangible assets. The company determines the fair value of its reporting units and intangible assets using income and market methods.