Are Carls' non-financial long-lived assets, such as goodwill, intangible assets, and property and equipment, required to be measured at fair value on a recurring basis?

According to Carls' 2024 Franchise Disclosure Document, the company's non-financial long-lived assets, which include goodwill, intangible assets, and property and equipment, are reported at carrying value and are not required to be measured at fair value on a recurring basis. This means that Carls does not regularly revalue these assets to reflect their current market value. Instead, they are recorded on the balance sheet at their historical cost, less any accumulated depreciation or amortization. This approach is typical for many companies as it avoids the complexities and potential volatility associated with frequent fair value measurements.

However, Carls does assess these long-lived assets for impairment on a periodic basis, or whenever events or changes in circumstances suggest that their carrying value may not be recoverable. These events or changes in circumstances could include a significant decrease in market value, a change in the way the asset is used, or adverse changes in legal factors or in the business climate. If such indicators are present, Carls will perform an impairment test to determine if the asset's carrying value exceeds its fair value.

If the impairment test indicates that the asset is impaired, Carls will write down the asset to its fair value, recognizing an impairment loss in the income statement. This ensures that the company's assets are not overstated on the balance sheet. The FDD also mentions that further information regarding impairment charges can be found in Note 16 of the financial statements. This note would likely provide more detail on the specific impairment tests performed and the factors considered in determining fair value.