What do the indefinite-lived intangible assets of Carls consist of?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Our indefinite-lived intangible assets consist of trademarks / tradenames. We test trademarks / tradenames for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. We first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount. Ifwe conclude that it is more likely than not that the indefinite-lived intangible asset is impaired, we then perform a quantitative test to determine whether the carrying amount is less than the fair value of the indefinite-lived intangible asset and measure the amount of impairment, if any.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the company's indefinite-lived intangible assets consist of trademarks and tradenames. These assets are tested for impairment annually or more frequently if circumstances suggest that their carrying amount may not be recoverable.
Carls assesses qualitative factors first to determine if it's more likely than not that the fair value of these intangible assets is less than their carrying amount. If this assessment indicates a potential impairment, a quantitative test is performed to compare the carrying amount to the fair value to measure the impairment amount, if any.
This means that the value of Carls's trademarks and tradenames are regularly reviewed to ensure they are accurately reflected on the company's financial statements. If the value of these assets declines, it could result in an impairment charge, which would negatively impact the company's financial performance.