Under what circumstances does Management Recruiters test its indefinite-lived intangible assets for impairment?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
Indefinite-lived intangible assets are tested annually for impairment during the fourth quarter or earlier upon the occurrence of certain events or substantive changes in circumstances that indicate the indefinite-lived intangible asset is more likely than not impaired. Such indicators may include a deterioration in macroeconomic conditions; a significant increase in cost factors; negative overall financial performance (including a decline in our expected future cash flows); entity-specific changes in key personnel, strategy or customers; and industry considerations including competition, legal, regulatory, contractual or asset-specific factors, among others. The occurrence of these indicators could have a significant impact on the recoverability of the indefinite-lived intangible assets and could have a material impact on our consolidated financial statements. For purposes of our impairment test, the assessment of indefinite-lived intangibles is performed at the asset level.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, indefinite-lived intangible assets are tested annually for impairment during the fourth quarter. Additionally, Management Recruiters will test earlier if certain events or substantive changes in circumstances indicate that the indefinite-lived intangible asset is more likely than not impaired.
These indicators may include a deterioration in macroeconomic conditions, a significant increase in cost factors, or negative overall financial performance, including a decline in expected future cash flows. Other indicators include entity-specific changes in key personnel, strategy, or customers, and industry considerations including competition, legal, regulatory, contractual, or asset-specific factors.
The occurrence of any of these indicators could significantly impact the recoverability of the indefinite-lived intangible assets and could have a material impact on Management Recruiters' consolidated financial statements. For the impairment test, the assessment of indefinite-lived intangibles is performed at the asset level.