Under what circumstances does Deka Lash review its long-lived assets for possible impairment?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company reviews long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, as measured by a comparison of undiscounted estimated future net cash flows to the carrying value of the asset. If an asset is considered impaired, the asset is written down to fair value. No impairment charges were recorded for the years ended December 31, 2023, 2022, or 2021.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, Deka Lash reviews long-lived assets for possible impairment when events or changes in circumstances suggest that the carrying amounts of those assets may not be recoverable. This determination is made by comparing the undiscounted estimated future net cash flows to the carrying value of the asset.
If Deka Lash considers an asset to be impaired, the asset is written down to its fair value. However, the FDD states that no impairment charges were recorded for the years ended December 31, 2023, 2022, or 2021.
For a prospective franchisee, this means that Deka Lash's accounting practices include regularly assessing the value of its assets. If an asset's value is deemed unrecoverable, the company will adjust its value to reflect its actual worth. This provides a more accurate representation of the company's financial health. Franchisees may want to inquire about the specific types of events or changes in circumstances that would trigger such a review, to better understand how Deka Lash manages its assets and financial reporting.