When are financial assets considered to be credit-impaired by Petro Stopping Center?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
Financial assets are considered to be credit-impaired when there is reasonable and supportable evidence that one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. This includes observable data concerning significant financial difficulty of the counterparty; a breach of contract; concession being granted to the counterparty for economic or contractual reasons relating to the counterparty's financial difficulty, that would not otherwise be considered; it becoming probable that the counterparty will enter bankruptcy or other financial re-organization or an active market for the financial asset disappearing because of financial difficulties. The Company also applies a rebuttable presumption that an asset is credit-impaired when contractual payments are more than 30 days past due. Where the Company has no reasonable expectation of recovering a financial asset in its entirety or a portion thereof for example where all legal avenues for collection of amounts due have been exhausted, the financial asset (or relevant portion) is written off.
Source: Item 14 — Other investments (FDD pages 131–208)
What This Means (2025 FDD)
According to Petro Stopping Center's 2025 Franchise Disclosure Document, financial assets are considered credit-impaired when there is reasonable evidence that an event has occurred that negatively impacts the estimated future cash flows of the asset. This determination includes several factors related to the counterparty's financial stability and payment behavior. Petro Stopping Center also presumes an asset is credit-impaired if contractual payments are more than 30 days past due.
Specifically, observable data indicating significant financial difficulty of the counterparty, a breach of contract, or the granting of concessions due to the counterparty's financial struggles all point to credit impairment. If it becomes probable that the counterparty will enter bankruptcy or undergo financial reorganization, or if an active market for the financial asset disappears due to financial difficulties, the asset is also considered credit-impaired.
Furthermore, if Petro Stopping Center has no reasonable expectation of recovering the full amount of a financial asset, such as when all legal avenues for collection have been exhausted, the asset (or the relevant portion) will be written off. This indicates a complete loss recognition on the unrecoverable asset. This policy provides a framework for Petro Stopping Center to assess and manage credit risk associated with its financial assets, ensuring timely recognition of potential losses.