Under what circumstances will Face Foundrie review its long-lived assets for impairment?

According to Face Foundrie's 2025 Franchise Disclosure Document, the company will review its long-lived assets for impairment when certain conditions are met. Specifically, Face Foundrie will conduct a review "whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable." This means that if there are any signs that the recorded value of an asset on the balance sheet is higher than what Face Foundrie could realistically get for it, the company will take a closer look.

If an impairment loss is identified, Face Foundrie will measure the loss by calculating the difference between the asset's fair value and its carrying amount. The loss will then be recognized during the period when the recognition criteria are initially applied and satisfied. This process ensures that Face Foundrie's financial statements accurately reflect the true value of its assets.

For a prospective franchisee, this policy means that Face Foundrie is proactive in assessing the value of its assets and will adjust its financial records to reflect any declines in value. This approach provides a more transparent view of the company's financial health. It is a standard accounting practice to ensure that assets are not overstated on a company's balance sheet, which could mislead investors and stakeholders.