How are Christian Brothers Automotive's right-of-use assets assessed for impairment?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
. Treasury notes or bond rates for a similar term.
Right-of-use assets are assessed for impairment in accordance with the Company's long-lived asset policy. The Company reassesses lease classification and remeasures right-of-use assets and lease liabilities when a lease is modified and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment.
The Company makes significant assumptions and judgments in evaluating its leases. In particular, the Company:
- Evaluates whether a contract contains a lease, by considering factors such as whether the Company obtained substantially all rights to control an identifiable underlying asset and whether the lessor has substantive substitution rights;
- Determines whether contracts contain embedded leases;
Notes to Consolidated Financial Statements December 31, 2024 and 2023
Evaluates leases with similar commencement dates, lengths of term, renewal options or other contract terms, which therefore meet the definition of a portfolio of leases, whether to apply the portfolio approach to such leases;
The Company does not to apply the recognition requirements to leases with an original term of 12 months or less, for which the Company is not likely to exercise a renewal option or purchase the asset at the end of the lease; rather, short-term leases will continue to be recorded on a straight-line basis over the lease term.
Goodwill
Goodwill represents the excess of the purchase price over fair value of the net assets acquired in a business combination.
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, right-of-use assets are assessed for impairment based on the company's long-lived asset policy. The company will reassess lease classification and remeasure right-of-use assets and lease liabilities when a lease is modified, if the modification is not accounted for as a separate new lease, or upon certain other events that require reassessment.
When evaluating leases, Christian Brothers Automotive makes assumptions and judgments. These include evaluating whether a contract contains a lease by considering if the company obtained substantially all rights to control an identifiable underlying asset and whether the lessor has substantive substitution rights. They also determine whether contracts contain embedded leases and evaluate leases with similar commencement dates, lengths of term, renewal options, or other contract terms to decide whether to apply a portfolio approach to such leases.
If certain factors indicate a potential impairment, Christian Brothers Automotive 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.