How are impairment losses on Gold Star assets to be held and used measured?

According to Gold Star's 2025 Franchise Disclosure Document, impairment losses on assets to be held and used are measured based on the fair value of the asset. This applies when events or changes in circumstances suggest that the carrying amount of the asset may not be recoverable. For assets intended to be disposed of by sale, they are reported at the lower of their carrying amount or their fair value, less any costs associated with selling them.

This accounting practice means that Gold Star regularly assesses its long-lived assets, such as property and equipment, to ensure their recorded values accurately reflect their current market worth. If an asset's value declines significantly, an impairment loss is recognized to reduce the asset's book value to its fair value. This ensures that the company's financial statements provide a realistic view of its financial position.

For a prospective franchisee, this indicates that Gold Star follows standard accounting practices to maintain accurate asset valuations. It also means that the company's financial performance could be affected by impairment losses if the value of its assets decreases. However, the FDD states that no adjustments were deemed necessary during any of the years ended December 31, 2024, 2023 and 2022.