If impairment is present, how is the carrying value of the impaired asset handled by Chocolate Bash?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company reviews long-lived assets for impairment whenever events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is present when the sum of the undiscounted estimated future cash flows expected to result from use of the assets is less than carrying value. If impairment is present, the carrying value of the impaired asset is reduced to its fair value. As of December 31, 2023, December 31, 2022, & December 31, 2021, no impairment loss has been recognized for long-lived assets.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 38)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the company reviews long-lived assets for impairment when events or circumstances suggest that the carrying value of those assets may not be fully recoverable. Impairment is determined to be present when the sum of the undiscounted estimated future cash flows expected from the use of the assets is less than their carrying value.
If such impairment is present, Chocolate Bash will reduce the carrying value of the impaired asset to its fair value. This means that the asset's value on the company's balance sheet will be adjusted to reflect its current market value or estimated worth, recognizing the loss in value.
As of December 31, 2023, December 31, 2022, and December 31, 2021, Chocolate Bash did not recognize any impairment loss for long-lived assets. This indicates that, during those years, the company's long-lived assets were not deemed to have experienced a significant decline in value requiring adjustment.