How often does Canopy Lawn Care test goodwill for impairment?
Canopy_Lawn_Care 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 55)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, the company tests for impairment of goodwill annually as of September 30. Goodwill is not amortized, but rather is evaluated 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. In the years 2022, 2023, and 2024, management believed there was no impairment of intangible assets.
In addition to the annual test, Canopy Lawn Care will also 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 or diminish the fair value of the goodwill. This ensures that any significant changes in the business environment are promptly reflected in the valuation of goodwill.