Under what circumstances does Crepe De Licious review its long-lived assets for potential impairment?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company reviews its long-lived assets for potential impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognized when the carrying amount of the asset exceeds the sum of the undiscounted cash flows resulting from its use and eventual disposition. The impairment loss is measured as the amount by which the carrying amount of the long-lived asset exceeds its fair value.
Source: Item 23 — RECEIPTS (FDD pages 57–233)
What This Means (2025 FDD)
According to Crepe De Licious's 2025 Franchise Disclosure Document, the company reviews its long-lived assets for potential impairment when certain conditions are met. Specifically, Crepe De Licious assesses these assets whenever events occur or changes in circumstances suggest that the recorded value of the assets might not be recoverable.
In practical terms, this means that if something happens that could reduce the value of an asset, such as equipment becoming obsolete or a significant drop in business at a particular location, Crepe De Licious will evaluate whether the asset's book value needs to be adjusted. This ensures that the company's financial statements accurately reflect the true value of its assets.
If the review indicates that the asset's carrying amount is higher than the total of the undiscounted cash flows expected from its use and eventual sale, Crepe De Licious will recognize an impairment loss. The loss is calculated as the difference between the asset's carrying amount and its fair value, effectively writing down the asset to its fair market value. This accounting practice is standard across many industries to ensure assets are not overvalued on a company's balance sheet.