Over how many years does Gold Star amortize goodwill on a straight-line basis?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
ent for purposes of computing depreciation are:
| Buildings | 15 – 39 Years |
|---|---|
| Leasehold Improvements | 15 – 39 Years |
| Furniture and Equipment | 3 – 15 Years |
| Vehicles | 5 Years |
Long-Lived Assets
Long-lived assets to be held and used are tested for recoverability whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable. When required, impairment losses on assets to be held and used are measured based on the fair value of the asset, and long-lived assets to be disposed of by sale are reported at the lower of the carrying amount or fair value less costs to sell. Long-lived assets were measured for impairment, and no adjustments were deemed necessary during any of the years ended December 31, 2024, 2023 and 2022.
Goodwill Accounting Alternative
The Comp
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to the 2025 Gold Star FDD, Gold Star amortizes goodwill on a straight-line basis over a period of ten years. This accounting practice means that the cost of goodwill, which represents the excess of the purchase price of a business over the fair value of its identifiable net assets, is systematically expensed over ten years.
For a prospective Gold Star franchisee, this accounting treatment is relevant if they were to acquire an existing Gold Star franchise location. The amortization of goodwill is a non-cash expense, meaning it reduces the reported profit of the business without involving an actual outflow of cash. This can impact the franchisee's financial statements and potentially affect key financial ratios used by lenders or investors.
The FDD also mentions that Gold Star evaluates goodwill for impairment only when a triggering event occurs, and no such event occurred during the years 2022, 2023 and 2024. This indicates that the company believes the value of its goodwill is stable and not at risk of significant decline. The FDD specifies future amortization expenses through December 2034, with varying amounts each year, which provides transparency into the expected amortization schedule.