Company: BRID
Filing Date: 2025-01-29
Form Type: 10-K
Source: 0001493152-25-004182
Chunk: 767

Company: BRIDGFORD FOODS CORP
Filing Date: 2025-01-29
Form: 10-K
Item: Item 9C
Chunk 767
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We test long-lived assets
for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If an impairment
is indicated, we measure the fair value of assets to determine if and when adjustments are recorded.

Leases

Leases are recognized in accordance
with ASC Topic 842 Leases (“ASC 842”) which requires a lessee to recognize assets and liabilities with lease terms of more
than 12 months. We lease or rent property for such operations as storing inventory and equipment. We analyze our agreements to evaluate
whether or not a lease exists by determining what assets exist for which we control usage for a period of time in exchange for consideration.
In the event a lease exists, we classify it as a finance or operating lease and record a right-of-use (“ROU”) asset and the
corresponding lease liability at the inception of the lease. In the case of month-to-month lease or rental agreements with terms of 12
months or less, we made an accounting policy election to not recognize lease assets and liabilities and record them on a straight-line
basis over the lease term. The storage units rented on a month-to-month basis for use by our Snack Food Product segment direct store delivery
route system are not costly to relocate and contain no significant leasehold improvements or degree of integration over leased assets.
Orders can be fulfilled by another route storage unit interchangeably. No specialized assets exist in the rental storage units. Market
price is paid for storage units. No guarantee of debt is made.

Finance lease assets are recorded
within property, plant and equipment, net of accumulated depreciation and amortization. The Company’s leases of a box truck used
in its Frozen Food Products segment qualify as finance leases. Finance lease liabilities are recorded under other liabilities. Operating
leases are recorded as ROU assets under property, plant and equipment and the corresponding liability is recorded under other liabilities.
The consolidated balance sheets reflect both the current and long-term obligation. The classification as a finance or operating lease
determines whether the recognition, measurement and presentation of expenses and cash flows are considered operating or financing.

Life insurance policies

We record the cash surrender
value or contract value for life insurance policies as an adjustment of premiums paid in determining the expense or income to be recognized
under the contract for the period. The cash surrender value is included in other non-current assets in the accompanying Consolidated Balance
Sheets. Expected proceeds from life insurance are recorded under prepaid expenses and other current assets (refer to Note