How does Pump It Up amortize goodwill?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
Goodwill represents the excess of purchase price over fair value of the net assets acquired. The Company amortizes goodwill on a straight-line basis over a 10-year period. Goodwill is reviewed for potential impairment if a triggering event occurs that indicates the Company's fair value may be below its carrying value. When impairment is likely, the Company calculates goodwill impairment as the amount the Company's carrying value including goodwill exceeds its fair value. As of December 31, 2024 and 2023, management believes no triggering events occurred.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is amortized using the straight-line method. This means the cost of the goodwill is evenly spread out over a specific period.
For Pump It Up, this amortization period is 10 years. This indicates that the company recognizes the value of goodwill diminishing steadily over a decade. This accounting practice affects Pump It Up's financial statements, influencing its reported profits and asset values over that 10-year span.
Additionally, Pump It Up reviews goodwill for potential impairment if certain events occur that suggest the company's fair value might be less than its carrying value. If impairment is likely, the company calculates the impairment as the amount by which the company's carrying value, including goodwill, exceeds its fair value. As of December 31, 2024 and 2023, the management of Pump It Up believed that no such triggering events had occurred, meaning no impairment was recognized.