Under what circumstances does Monicals Pizza review its long-lived assets for impairment?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company reviews long-lived assets, including property and equipment and lease right of use assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully recoverable. An impairment loss would be recognized when the estimated future cash flows from the use of the asset are less than the carrying amount of that asset. There were no impairments recognized during the years ended December 31, 2024 and 2023.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to the 2025 Monicals Pizza Franchise Disclosure Document, Monicals Pizza reviews long-lived assets, including property, equipment, and lease right-of-use assets, for impairment when events or changes in business circumstances suggest that the carrying amount of an asset may not be fully recoverable. An impairment loss is recognized if the estimated future cash flows from using the asset are less than its carrying amount.
For a prospective franchisee, this means that Monicals Pizza assesses the value of its assets regularly to ensure they are not overvalued on the company's balance sheets. This process is crucial for maintaining accurate financial reporting and reflecting the true economic value of the assets. The FDD states that no impairments were recognized during the years ended December 31, 2024, and 2023.
This policy is a standard accounting practice, ensuring that assets are not carried at amounts exceeding their recoverable value. Franchisees benefit from knowing that Monicals Pizza adheres to these practices, as it provides transparency and reliability in the company's financial statements. Understanding this policy helps franchisees assess the financial health and stability of Monicals Pizza.