How is the impairment loss measured for Crepe De Licious's long-lived assets?

According to Crepe De Licious's 2025 Franchise Disclosure Document, the company reviews its long-lived assets for potential impairment when events or changes in circumstances suggest that the carrying value of those assets may not be recoverable. This means that Crepe De Licious assesses whether the recorded value of assets like property, equipment, and leasehold improvements is still justified based on their future use.

An impairment loss is recognized by Crepe De Licious when the carrying amount of the asset exceeds the sum of the undiscounted cash flows expected from its use and eventual disposal. In simpler terms, if the total cash Crepe De Licious expects to generate from an asset is less than the value recorded on its books, an impairment loss is recognized.

The impairment loss is specifically measured as the amount by which the carrying amount of the long-lived asset exceeds its fair value. This means that Crepe De Licious will write down the value of the asset on its balance sheet to reflect its current fair market value, with the difference being recognized as an expense in the period the impairment is identified. For a franchisee, this accounting practice is important to understand as it affects the overall financial health and reported earnings of Crepe De Licious.