What was the total value of Precision Door Service's goodwill as of December 31, 2022?
Precision_Door_Service Franchise · 2025 FDDAnswer from 2025 FDD Document
| As of December 31, | 2023 | (Restated) 2022 |
|---|---|---|
| Assets | ||
| Current assets Cash Restricted Cash Trade accounts receivable - net Trade notes receivable, current portion – net Inventories Prepaid selling expenses, current Other current assets | $ 3,171 1,566 23,826 9,530 989 6,935 2,597 | $ 2,381 3,359 21,803 7,846 1,592 4,449 1,644 |
| Total current assets | 48,614 | 43,074 |
| Property and equipment | 18,779 | 18,279 |
| – | ||
| net | ||
| Prepaid selling expenses, less current portion | 42,479 | 27,556 |
| Trade notes receivable, less current portion - | 15,221 | 17,884 |
| net | ||
| Intangible assets - | 1,341,184 | 1,326,225 |
| net | ||
| Goodwill | 1,732,653 | 1,728,584 |
| Total assets | $ 3,198,931 | $ 3,161,602 |
For the period ending December 31, 2022, the goodwill recognized is attributable to intangible assets not qualifying for separate recognition. The Company currently expects to be able to deduct goodwill of $135,695 for tax purposes. Transaction costs totaling $3,067 were incurred at closing and are included in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss).
During 2023, we determined that our prior year goodwill impairment was overstated and the goodwill balance was understated, resulting in an error in our previously issued financial statements for the period ended December 31, 2022. The overstatement of impairment expense was the result of concluding, in error, that reporting units in Assetco were the same as in the Manager. We have instead concluded that Assetco is comprised of only one consolidated reporting unit, and based on our quantitative impairment analysis performed as of December 31, 2022, we concluded that no impairment existed at Assetco.
Source: Item 21 — Financial Statements (FDD page 91)
What This Means (2025 FDD)
According to Precision Door Service's 2025 Franchise Disclosure Document, the company's goodwill as of December 31, 2022, was restated to $1,728,584. Additionally, there was an adjustment to goodwill for unrealized gain/loss on foreign currency of $4,069. Goodwill represents the excess of consideration transferred over the fair value of identifiable net assets acquired. Precision Door Service tests goodwill annually for impairment, typically around October 1st.
The FDD indicates that during 2023, Precision Door Service determined that their prior year goodwill impairment was overstated, and the goodwill balance was understated, resulting in an error in their previously issued financial statements for the period ended December 31, 2022. The overstatement of impairment expense was the result of concluding, in error, that reporting units in Assetco were the same as in the Manager. They concluded that Assetco is comprised of only one consolidated reporting unit, and based on their quantitative impairment analysis performed as of December 31, 2022, they concluded that no impairment existed at Assetco.
For a prospective franchisee, goodwill is an intangible asset that reflects the value of Precision Door Service's brand reputation and customer relationships. The annual testing for impairment suggests that Precision Door Service actively monitors the value of its goodwill. The restatement of the goodwill balance for 2022 indicates that the company has made corrections to its financial reporting, which could be a sign of increased scrutiny and accuracy in its financial statements.
It is important to note that the company expects to be able to deduct goodwill of $135,695 for tax purposes. Transaction costs totaling $3,067 were incurred at closing and are included in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss).