How did Checkers amortize goodwill, and over what period?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Goodwill represents the excess of the consideration transferred over the net of the acquisition date fair values of the assets acquired and liabilities assumed in a business combination. Goodwill is primarily attributable to the deferred tax liability created by the business combination. The Company elected to amortize the goodwill over a 10-year period on a straight-line basis. Impairment testing is performed at the enterprise level upon the occurrence of a triggering event indication that the fair value of the Company might be less than its carrying amount. When a triggering event occurs, the Company has the option to perform a qualitative assessment to determine whether a quantitative test is needed. If that assessment demonstrates that it is more likely than not that an impairment does not exist, no further testing is required. If impairment of goodwill is more likely than not, a quantitative test is required that compares the fair value of the Company with its carrying amount. If the carrying amount exceeds fair value, that amount represents the impairment loss to be recognized, up to the carrying amount of goodwill. See Note 11. Goodwill and Intangible Assets, Net.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, goodwill represents the excess of consideration transferred over the net of the acquisition date fair values of assets acquired and liabilities assumed in a business combination. Checkers primarily attributes goodwill to the deferred tax liability created by the business combination. The company elected to amortize the goodwill over a 10-year period using the straight-line method.
Checkers performs impairment testing at the enterprise level if a triggering event indicates that the company's fair value might be less than its carrying amount. When such an event occurs, Checkers can perform a qualitative assessment to determine if a quantitative test is needed. If the qualitative assessment suggests that impairment is unlikely, no further testing is required. However, if impairment of goodwill is more likely than not, a quantitative test is necessary to compare the company's fair value with its carrying amount.
If the carrying amount exceeds the fair value, the difference represents the impairment loss to be recognized, up to the carrying amount of goodwill. This means that Checkers assesses the value of its goodwill regularly and adjusts its financial statements to reflect any declines in value, which could impact the company's reported earnings and assets.