At what level does Golden Krust Caribbean Restaurant test for goodwill impairment?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
cash flow models, quoted fair values and third-party independent appraisals.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Goodwill
The Company adopted the alternative method of accounting for goodwill which allows it to amortize goodwill on a straight-line basis over a period of ten years. Goodwill continues to be evaluated and adjusted if events and circumstances indicate that a permanent decline in value below the current unamortized historical cost has occurred. The Company tests goodwill impairment at the entity level. As of December 31, 2023 and 2022, the Company concluded that there was no
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, the company tests goodwill impairment at the entity level. Goodwill, which relates to a business reorganization that occurred January 1, 2019, is evaluated and adjusted if events and circumstances indicate a permanent decline in value below the current unamortized historical cost has occurred.
Golden Krust Caribbean Restaurant adopted the alternative method of accounting for goodwill, allowing it to amortize goodwill on a straight-line basis over a period of ten years. For the years ended December 31, 2023 and 2022, the amortization expense was $32,748, and the company concluded that there was no goodwill impairment.
For a prospective franchisee, this means that Golden Krust Caribbean Restaurant monitors the value of its goodwill at the company level and adjusts it as needed based on specific events or circumstances. The company's consistent amortization expense and the absence of goodwill impairment for the stated years may indicate financial stability in this area.