How does Pump It Up determine the impairment to be recognized if assets are considered impaired?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
Impairment of Long-Lived Assets
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. Management does not believe impairment indicators were present as of December 31, 2024.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, the company reviews long-lived assets for impairment whenever events or changes in circumstances suggest that the carrying amount of an asset may not be recoverable. The recoverability of these assets is assessed by comparing the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by the asset.
If the assets are considered impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. This means Pump It Up will write down the value of the asset on its books to reflect its actual worth, recognizing a loss for the difference. Assets that are slated for disposal are reported at the lower of their carrying amount or their fair value, less any costs associated with selling them.
As of December 31, 2024, Pump It Up's management did not believe that any impairment indicators were present. This suggests that, in their assessment, the carrying values of the company's assets were supportable by their expected future cash flows and fair values at that time.