Under what circumstances does Crave Cookies evaluate the recoverability of the carrying value of its long-lived assets?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
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 amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value.
No asset impairment was recognized during the years ended December 31, 2023 or 2022.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies's 2025 Franchise Disclosure Document, the company assesses the recoverability of the carrying value of its long-lived assets when specific events or changes in circumstances suggest that the current carrying amount of these assets may not be recoverable. This evaluation is triggered by indicators that the asset's value might be impaired.
If the evaluation determines that the undiscounted estimated future cash flows expected from the use and eventual disposition of the asset are less than its carrying amount, Crave Cookies will adjust the asset's cost to its fair value. This adjustment results in the recognition of an impairment loss. The impairment loss is calculated as the difference between the asset's carrying amount and its fair value, reflecting the reduction in the asset's recorded value to match its actual worth.
The FDD states that no asset impairment was recognized during the years ended December 31, 2023 or 2022. This suggests that, during those periods, no events or circumstances arose that triggered the need for such an adjustment. For a prospective franchisee, this accounting practice is important because it affects the reported financial health of Crave Cookies, potentially influencing investment decisions and the perceived stability of the franchise system.