When did Checkersrallys record property and equipment at fair value?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment were recorded at fair value in connection with the Merger for the Predecessor periods and in connection with the Out-of-Court Restructuring for the Successor period and are otherwise recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated over the lesser of their estimated useful lives (generally 10 years) or the remaining lease term.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, property and equipment were recorded at fair value in connection with the Merger for the Predecessor periods. Additionally, property and equipment were recorded at fair value in connection with the Out-of-Court Restructuring for the Successor period. Otherwise, property and equipment are recorded at cost.
For a prospective Checkersrallys franchisee, this means that the value of property and equipment can fluctuate based on certain events like mergers or restructurings. The company uses fair value accounting during specific transactions, which can provide a more current market valuation of these assets at those times. However, in normal day-to-day operations outside of these major events, Checkersrallys records property and equipment at cost, less accumulated depreciation.
It's important to note that Checkersrallys calculates depreciation using the straight-line method over the estimated useful lives of the assets, with leasehold improvements depreciated over the shorter of their useful life (generally 10 years) or the remaining lease term. This depreciation method affects the reported value of these assets over time on Checkersrallys's balance sheet.