How does Christian Brothers Automotive assess the recoverability of an asset if a potential impairment is indicated?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
If such factors indicate a potential impairment, the Company will assess the recoverability of an asset by determining if the carrying amount of the asset exceeds its estimated undiscounted net cash flow, excluding interest. Any impairment would be measured as the difference between the asset's carrying amount and its estimated fair value. For the years ended December 31, 2024 and 2023, there were no triggering events.
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, the company has specific procedures for assessing the recoverability of assets. If certain factors suggest that an asset might be impaired, Christian Brothers Automotive will evaluate whether the asset's carrying amount exceeds its estimated undiscounted net cash flow, excluding interest.
If the carrying amount is indeed higher, it indicates that the asset may be impaired. In such cases, the impairment is measured by calculating the difference between the asset's carrying amount and its estimated fair value. This fair value represents the price that would be received to sell the asset in an orderly transaction between market participants at the measurement date.
It's worth noting that for the years ending December 31, 2024, and 2023, Christian Brothers Automotive reported that there were no triggering events that would have necessitated such an impairment assessment. This suggests that, at least during those periods, the company's assets were not considered to be at a high risk of impairment.