Property and Equipment

Property and equipment are stated at cost. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts, and the resulting gain or loss is reflected in the Combined Statements of Operations. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets generally ranging from 3

12

RTM Restaurant Group
May 29, 2005
Notes to Combined Financial Statements (continued)
(In Thousands, Except Share and Per Share Amounts)

2. Summary of Significant Accounting Policies—(continued)

to 30 years, or the term of the lease for buildings under capital lease and leasehold improvements, if shorter. The estimated useful lives for major asset classifications are as follows:

Leasehold improvements under leases for which there exists an economic compulsion to renew the lease under one or more renewal options are amortized over the term of the lease plus anticipated renewal periods. For such leases, minimum lease payments are recognized on a straight-line basis over the lease term, including the anticipated renewal periods. Routine maintenance and repairs are charged to expense, and expenditures for renewals and betterments are capitalized.

Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that 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 undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, impairment is measured by comparing the carrying amount to the fair value estimated by discounted future net cash flows or third-party appraisals, if available. In 2004, Management determined no impairment was associated with the Group’s long-lived assets. During 2005, the Group recorded impairment charges of $801, principally for assets of restaurants in operation for which the expected future cash flows did not recover the carrying value of the assets. Such impairment was measured based on the discounted expected future cash flows and appraised values of the assets. The charge is included in depreciation and amortization in the accompanying statement of operations.

Note 5: Property and Equipment

Property and equipment consist of the following as of the dates presented (in thousands):

Property and Equipment

      Property and equipment are stated at cost. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts and the resulting gain or loss is reflected in the statements of operations. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets, generally ranging from 3 to 30 years, or the term of the lease for leasehold improvements, if shorter. Leasehold improvements under leases for which there exists an economic compulsion to renew the lease under one or more renewal options are amortized over the term of the lease plus anticipated renewal

35

RTM RESTAURANT GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS—(Continued)
(In Thousands, Except Share and Per Share Amounts)
(Unaudited)

2. Summary of Significant Accounting Policies—(Continued)

periods. For such leases, minimum lease payments are recognized on a straight-line basis over the lease term, including the anticipated renewal periods. Routine maintenance and repairs are charged to expense, and expenditures for renewals and betterments are capitalized.

      Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that 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 undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, impairment is measured by comparing the carrying amount to the fair value or discounted future net cash flows. No impairment charges were recorded for the 40 week period ended February 29, 2004. Impairment charges of $1,131 related to property and equipment at restaurants with negative cash flows were recorded in the 40 week period ended March 6, 2005 and are included in depreciation expense in the accompanying statement of operations.

Note 3: Property and Equipment

Property and equipment consist of the following as of the dates presented (in thousands):