When does My Salon Suite evaluate goodwill for impairment?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
In accordance with ASC 350, the Company evaluates goodwill for impairment whenever events or changes in circumstances indicate that the fair value of the entity may be below its carrying amount. When necessary, a goodwill impairment loss is measured as the amount by which the carrying amount of the Company, including goodwill, exceeds its fair value. Any goodwill impairment loss determined shall not exceed the carrying amount of goodwill.
The Company determined that there were no indications of impairment in 2023 or 2022 related to goodwill or other intangibles.
Source: Item 6 — Other Intangibles and Goodwill (FDD pages 274–314)
What This Means (2025 FDD)
According to the 2025 FDD, My Salon Suite evaluates goodwill for impairment when events or changes in circumstances suggest that the fair value of the entity may be less than its carrying amount. This is done in accordance with FASB ASC 350, Intangibles, Goodwill and Other. A goodwill impairment loss is measured by determining the amount by which the carrying amount of the company, including goodwill, exceeds its fair value; however, the impairment loss cannot exceed the carrying amount of goodwill.
In simpler terms, My Salon Suite assesses the value of its goodwill (an intangible asset representing the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination) regularly. If there are indications that the company might be worth less than what's on the books, they perform a more detailed evaluation to see if the goodwill has been impaired (reduced in value). If the company determines that the goodwill has been impaired, they will write down the value of the goodwill on their balance sheet.
The FDD states that the company determined that there were no indications of impairment in 2023 or 2022 related to goodwill or other intangibles. This means that, at least for those years, My Salon Suite did not see any signs that the value of its goodwill had decreased. As a potential franchisee, it's important to understand how My Salon Suite manages and evaluates its intangible assets, as this can impact the overall financial health and stability of the company.