Did Cicis recognize any impairment losses for the years ended December 31, 2023 and 2022?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
Estimated amortization expense, based on the current carrying value of goodwill for each of the fiscal years 2024 through 2028 is $2,380.
Estimated amortization expense, based on the current carrying value of franchise agreements for each of the fiscal years 2024 through 2028 is $10,769.
Asset impairment assessments: The Company periodically evaluates the carrying value of long-lived assets to be held and used at the asset group level including, but not limited to, capital assets and intangible assets, when events and circumstances warrant such a review. The carrying value of a longlived asset is considered impaired when the anticipated undiscounted cash flow from such asset is less than its carrying value. In that event, a loss would be recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value would be determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose. There were no such impairment losses recognized for the years ended December 31, 2023 and 2022.
Revenue recognition: The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which provides a five-step model for recognizing revenue from contracts with custo
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, no impairment losses were recognized for the years ended December 31, 2023, and 2022. Cicis periodically assesses the carrying value of its long-lived assets, such as capital and intangible assets, and an impairment loss is recognized if the anticipated undiscounted cash flow from an asset is less than its carrying value. The loss is based on the difference between the carrying value and the fair value of the asset. Fair value is determined using anticipated cash flows discounted at a rate commensurate with the risk involved.
For goodwill specifically, Cicis has elected an accounting alternative allowing goodwill to be amortized on a straight-line basis over a maximum of 10 years. Under this method, Cicis tests for goodwill impairment only when events or circumstances suggest that the company's fair value is less than its carrying amount. The test is performed at the company level, and if impairment is indicated, a loss is recognized to the extent that the carrying amount exceeds the fair value, not exceeding the carrying amount of goodwill.
This accounting approach means that Cicis did not identify any indicators of impairment during the specified years, and therefore, no impairment losses were recorded. For a prospective franchisee, this indicates that Cicis's assets were not deemed to have lost significant value during those periods, based on their accounting practices.