Under what conditions does Cicis evaluate the carrying value of its long-lived assets?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
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, 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 periodically evaluates the carrying value of its long-lived assets, including capital assets and intangible assets, at the asset group level. This review is triggered when specific events or circumstances suggest a need for it.
The carrying value of a long-lived asset is considered impaired if the anticipated undiscounted cash flow from the asset is less than its carrying value. If impairment is indicated, Cicis recognizes a loss. The loss is calculated as the difference between the asset's carrying value and its fair value. The fair value is primarily determined by discounting anticipated cash flows at a rate that reflects the associated risks.
For long-lived assets slated for disposal, losses are determined similarly, but the fair values are reduced by the costs associated with the disposal. The FDD states that no such impairment losses were recognized for the years ended December 31, 2024 and 2023.