Under what circumstances does City Wide evaluate the recoverability of the carrying value of its long-lived assets?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
equipment 5 years Computer software 3 to 10 years Telephone equipment 5 years
Software Subscription
During 2023, the Company entered into a multi-year software subscription which is accounted for as a cloud computing arrangement. During 2024, the Company abandoned this arrangement and incurred a loss of $1,454,554.
Long-Lived Asset Impairment
The Company evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset are less than the carrying a
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the company assesses the recoverability of the carrying value of its long-lived assets whenever specific events or changes in circumstances suggest that the current carrying amount of those assets may not be recoverable. This evaluation is triggered by indicators that the asset's value might be impaired.
If City Wide determines that an asset's estimated future cash flows, without discounting, are less than its carrying amount, the company adjusts the asset's cost to its fair value. Following this adjustment, City Wide recognizes an impairment loss. This loss is calculated as the difference between the asset's carrying amount and its fair value, reflecting the reduction in the asset's value due to impairment.
For the year ending December 31, 2024, City Wide recognized an impairment loss of $1,454,554. No asset impairment was recognized during the years ended December 31, 2023 and 2022.