What was the gross carrying amount of Chem Dry's goodwill in 2021?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
computer equipment | 1,442 | 1,253 | 1,048 | 3-5 | | Leasehold improvements | 441 | 431 | 412 | 1-7 | | Construction in progress | 1,005 | 362 | 260 | - | | Total cost | 4,145 | 3,036 | 2,482 | | | Accumulated depreciation | 1,925 | 1,335 | 872 | | | Net property and equipment | $ 2,220 | $ 1,701 | $ 1,610 | |
Depreciation expense for the years ended December 31, 2023, 2022, and 2021 was $591, $490, and $443, respectively.
Note 9 - Intangible Assets and Goodwill
Intangible assets and goodwill of the Company at December 31, 2023, 2022, and 2021 are summarized as follows:
| 2022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2023 | (As Restated) | 2021 | |||||||
| Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||
| Amortized intangible assets: | |||||||||
| Fra |
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the gross carrying amount of the company's goodwill in 2021 was $57,322 (in thousands). Goodwill represents the intangible assets acquired in business combinations and reflects the value that is not separately identifiable. Chem Dry assesses goodwill for impairment at least annually, rather than amortizing it.
In 2023, Chem Dry recognized a goodwill impairment loss of $45,537 (in thousands) due to deteriorating economic conditions, rising interest rates, and strategic shifts, including reducing the franchise network. In 2022, a goodwill impairment loss of $1,266 (in thousands) was recognized due to Delta ceasing operations. However, no impairment charge was recognized in 2021.
Prospective franchisees should understand that goodwill can fluctuate and be subject to impairment based on the company's performance and market conditions. While goodwill itself isn't amortized, impairment charges can negatively impact the company's financial results, as was the case for Chem Dry in 2022 and 2023. This can be an important factor to consider when evaluating the financial stability and future prospects of the franchise.