What accounting alternative has Cicis elected for the subsequent measurement of goodwill?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
Goodwill and intangible assets: The Company has elected the accounting alternative provided in Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-02, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill, which allows a private company to elect an accounting alternative for the subsequent measurement of goodwill. The ASU allows goodwill to be amortized on a straight-line basis over the estimated useful life with a maximum life of 10 years. Pursuant to this accounting alternative, the Company tests for goodwill impairment upon the occurrence of an event or circumstance that may indicate the fair value of the Company is less than its carrying amount and has elected to perform this test at the Company level. If events or circumstances are present that may indicate the fair value of the Company is less than its carrying value, the estimated fair value of the Company is compared to its carrying amount and an impairment loss is recognized for the excess of the carrying amount over the fair value (if any), not to exceed the carrying amount of goodwill. No indicators of impairment were identified during the years ended December 31, 2024 and 2023.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, Cicis has elected an accounting alternative for the subsequent measurement of goodwill, as provided in Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-02, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill. This election is available to private companies.
This accounting alternative allows Cicis to amortize goodwill on a straight-line basis over its estimated useful life, with a maximum life of 10 years. Furthermore, Cicis tests for goodwill impairment only when an event or circumstance suggests that the company's fair value is less than its carrying amount, and this test is performed at the company level.
If such events or circumstances arise, Cicis compares the estimated fair value of the company to its carrying amount. An impairment loss is recognized if the carrying amount exceeds the fair value, but the loss cannot exceed the carrying amount of the goodwill. The document indicates that no indicators of impairment were identified during the years ended December 31, 2024 and 2023.