According to Crab N Spice, when is impairment present?

According to Crab N Spice's 2024 Franchise Disclosure Document, impairment of long-lived assets is assessed by the company. Impairment is present when the sum of the undiscounted estimated future cash flows expected from the use of the assets is less than the carrying value. If impairment is present, the carrying value of the impaired asset is reduced to its fair value.

For a prospective Crab N Spice franchisee, this means that the franchisor regularly evaluates the value of its assets. If the expected future cash flows from an asset are less than its current recorded value, the asset's value is adjusted downward to reflect its actual worth. This process can affect the financial statements of Crab N Spice, potentially influencing investor confidence and the overall financial health of the company.

It's worth noting that as of December 31, 2023, December 31, 2022, and December 31, 2021, Crab N Spice did not recognize any impairment loss for long-lived assets. This indicates that, at least during those years, the company's assets were not considered to be impaired based on their assessment criteria. Franchisees should be aware of these accounting practices, as they provide insight into how the franchisor manages and values its assets, which can be an indicator of financial stability.