Under what circumstances does Pump It Up evaluate identifiable intangible assets for impairment more frequently than annually?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Intangible Assets
The Company evaluates identifiable intangible assets not subject to amortization for impairment on an annual basis, or more frequently when events or changes in circumstances indicate that it is more likely than not that an asset is impaired. Such circumstances could include, but are not limited to, a significant decrease in the market value of an asset or a significant adverse change in the extent or manner in which an asset is used or in its physical condition. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized.
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Intangible Assets (Continued)
The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds the fair value of the asset.
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 evaluates identifiable intangible assets not subject to amortization for impairment on an annual basis. However, Pump It Up will conduct these evaluations more frequently if events or changes in circumstances suggest that it is more likely than not that an asset is impaired.
These circumstances include, but are not limited to, a significant decrease in the market value of an asset or a significant adverse change in the extent or manner in which an asset is used or in its physical condition. To determine impairment, Pump It Up measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it.
If the sum of the expected future cash flows is less than the carrying value of the asset being evaluated, Pump It Up would recognize an impairment loss. The impairment loss is calculated as the amount by which the carrying value of the asset exceeds the fair value of the asset, with fair value measured using various valuation techniques, including the discounted value of estimated future cash flows. This evaluation process requires Pump It Up to make assumptions about future cash flows over the life of the asset, which involves significant judgment, and actual results may differ from these assumptions and estimated amounts.