What was the reported amount of goodwill associated with the Checkersrallys acquisition?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
vely. These impairment charges related to stores that were not profitable, and with investment, were not projected to be profitable. No impairments of property and equipment were recorded in the year ended January 3, 2022.
(Tabular Dollars in Thousands, Excep
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the company recognized $31.8 million of goodwill as part of a business combination. This goodwill was recognized during the Successor period. As of January 2, 2023 (predecessor) there was no goodwill.
Goodwill, in this context, 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. Checkersrallys attributes this goodwill primarily to the deferred tax liability created by the business combination.
Checkersrallys has elected to amortize the goodwill over a 10-year period using the straight-line method. Additionally, Checkersrallys conducts impairment testing at the enterprise level if there is a triggering event that suggests the company's fair value might be less than its carrying amount. This involves assessing whether a quantitative test is needed, and if impairment is likely, comparing the company's fair value with its carrying amount to determine any impairment loss.