What was the goodwill impairment amount for Precision Door Service at the end of 2023?
Precision_Door_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
fiable net assets acquired. The Company tests goodwill annually for impairment, or earlier if events or changes in circumstances indicate that impairment may exist. Management's impairment tests are generally performed as of October 1st annually. The Company's current goodwill balance resulted from the acquisition of the Company as of September 1, 2021, and from the Company's acquisitions in the successor period, as discussed in Note 1.
The Company performed a qualitative assessment of its goodwill as of October 1, 2023 and concluded that indicators of impairment existed for certain of its reporting uni
Source: Item 21 — Financial Statements (FDD page 91)
What This Means (2025 FDD)
According to Precision Door Service's 2025 Franchise Disclosure Document, a goodwill impairment expense of $417,591 was recorded for the year ending December 31, 2023. This indicates that Precision Door Service recognized a decrease in the value of its goodwill during that period. Goodwill, in accounting terms, represents the intangible assets of a business, such as brand reputation and customer relationships, acquired through acquisitions.
The document explains that Precision Door Service tests goodwill annually for impairment, typically around October 1st. The impairment test involves assessing whether the fair value of the reporting unit is less than its carrying amount. If the fair value is lower, an impairment charge is recorded to reflect the reduction in value. In 2023, a qualitative assessment led to the conclusion that indicators of impairment existed for certain reporting units, which then led to the $417,591 impairment charge.
For a prospective Precision Door Service franchisee, this information is relevant because it provides insight into the financial performance and valuation of the company's assets. A significant goodwill impairment could signal challenges within the business or its acquired entities. However, it's also important to note that goodwill impairment is a non-cash expense, meaning it doesn't directly impact the company's cash flow. Franchisees should consider this information in conjunction with other financial metrics and business performance indicators when evaluating the franchise opportunity.