Impairments

We measure certain assets and liabilities at fair value on a nonrecurring basis, including long-lived assets that have been reduced to fair value when they are held for sale and long-lived assets that are written down to fair value when they are impaired.

We evaluate the carrying amount of long-lived assets held and used in the business periodically and when facts and circumstances indicate that an impairment may exist. A long-lived asset group is considered impaired when the carrying value of the asset group exceeds its fair value. The impairment loss recognized is the excess of carrying value above its fair value. The estimation of fair value requires significant judgment regarding future restaurant performance and market-based real estate appraisals. To estimate fair value for locations where we own the land and building, we obtain appraisals from third-party real estate valuation firms based on sales of comparable properties in the same area as our restaurant location, which we believe approximates fair value. We use discounted future cash flows to estimate fair value of long-lived assets for our leased locations. Our weighted average cost of capital is used as the discount rate in our fair value measurements for leased locations, which is considered a Level 3 measurement. A reasonable change in this discount rate would not have a significant impact on these fair value measurements.

Impairment charges of $285 were recorded in the three months and six months ended October 23, 2015, and related to two nonoperating restaurant properties where the respective fair values were determined to be lower than the carrying value. We recorded $1,577 of impairment charges in the six months ended October 24, 2014, a result of adverse performance in the first quarter of fiscal 2015 and a reassessment of expected future cash flows at five operating and one nonoperating restaurant properties.

The following table represents impairments for those assets remeasured to fair value during the three and six months ended October 23, 2015, and the corresponding period last year.



	Three Months Ended					Six Months Ended
(in thousands)	October 23, 2015			October 24, 2014		October 23, 2015			October 24, 2014
Bob Evans Restaurants
Assets held and used	$	147	(1)	$	—	$	147	(1)	$	1,319	(3)
Assets held for sale	138		(2)	—		138		(2)	258		(4)
Total Impairments	$	285		$	—	$	285		$	1,577

⁽¹⁾ Relates to one nonoperating location

⁽²⁾ Relates to one nonoperating location

⁽³⁾ Relates to five operating locations

⁽⁴⁾ Relates to one nonoperating location