Why did Cool Binz recognize a goodwill impairment loss related to Delta in 2022?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
verall cost of accessible debt necessary to fuel investment; furthermore, strategic shifts undertaken by management to improve the overall health of the business, including ongoing efforts to reduce the overall size of its franchise network in order to resolve a host of franchisee-related matters of noncompliance, adversely impacted expected future cash inflows as well. The remaining goodwill was determined not to be impaired, as the carrying value of the remaining company exceeded the fair value.
During 2022, Delta ceased operations, and, as a result, management determined that the carrying amount of Delta exceeded fair value, which was estimated based on the present value of expected future cash inflows. Accordingly, a goodwill impairment loss of $1,266 was recognized in 2022, specifically related to Delta ceasing operations, which is included within operating expenses on the consolidated statement of operations.
Intangible Assets
Intangible assets subject to amortization are stated at cost and are amortized using the straightline method over the estimated useful lives of the assets.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, a goodwill impairment loss of $1,266 was recognized in 2022 related to Delta. This loss was recognized because Delta ceased operations during 2022. As a result, Cool Binz management determined that the carrying amount of Delta exceeded its fair value, which was estimated based on the present value of expected future cash inflows. This impairment loss is included within operating expenses on the consolidated statement of operations.
Additionally, Cool Binz determined that the carrying amount of the Delta trade name and franchise agreements exceeded their fair value based on estimated future cash flows. Consequently, impairment losses of $787 and $4,165 were recognized for the Delta trade name and franchise agreements, respectively, and included in operating expenses during 2022. No impairment charge was recognized in 2023 or 2024.
The 2022 financial statements were restated to correct an error relating to unidentified impairment of the Delta trade name and franchise agreement intangible assets. Retained earnings at the beginning of 2023 were adjusted for the effects of the restatement on 2022. This restatement affected the financial statement line items for fiscal year 2022.