What is the amortization period for the goodwill associated with Legacy Success Group, LLC for Exit?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2025 | $ | 84,065 |
|---|---|---|
| 2026 | 84,065 | |
| 2027 | 84,065 | |
| 2028 | 83,997 | |
| 2029 | 83,808 | |
| Thereafter | 309,814 | |
| Total estimated amortization expense | $ 729,814 |
Goodwill
In accordance with update 2014-02 to the FASB Accounting Standards Codification (ASC) 350, Intangibles – Goodwill and Other, the Company has elected to apply the accounting alternative for goodwill. The accounting alternative allows an entity to take goodwill relating to each business combination or reorganization event resulting in fresh-start reporting (amortizable unit of goodwill) and amortize it on a straight-line basis
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the company recorded goodwill associated with the acquisition of Legacy Success Group, LLC, on January 1, 2018. The goodwill, totaling $24,973, is related to Legacy Success Group, LLC's reputation within its industry. Exit began amortizing this goodwill over a ten-year period starting January 1, 2018.
For a prospective Exit franchisee, this means that Exit is spreading the cost of this intangible asset (goodwill) over a 10-year period for accounting purposes. This amortization reflects the gradual expensing of the goodwill's value over its estimated useful life. The annual amortization expense was $2,914 for the years ended December 31, 2024, 2023, and 2022.
It's important to note that Exit assesses the goodwill for impairment if any events or changes in circumstances suggest that the fair value of the company may be less than its carrying amount. This assessment ensures that the value of the goodwill remains accurate and is not overstated on Exit's financial statements. Management determined that there was no impairment related to this goodwill for the years ended December 31, 2024, 2023, and 2022.
This accounting treatment is in accordance with generally accepted accounting principles, specifically related to goodwill and intangible assets. The consistent amortization expense indicates a stable and predictable expense related to this particular asset, which can be a factor in Exit's overall financial performance.