How often does Americas Best Value Inn test goodwill for impairment?
Americas_Best_Value_Inn Franchise · 2025 FDDAnswer from 2025 FDD Document
Goodwill is not amortized, and we test goodwill for impairment each year or more frequently should facts and circumstances indicate that it is more likely than not that the fair value is less than the carrying amount. As part of the impairment test, we may elect to perform an assessment of qualitative factors. If this qualitative assessment indicates that it is more likely than not that the fair value, including goodwill, is less than its carrying amount, or if we elect to bypass the qualitative assessment, we would then proceed with a quantitative assessment. The quantitative assessment involves calculating an estimated fair value based on projected future cash flows, and comparing the estimated fair value to the carrying amount, including goodwill. If the estimated fair value exceeds carrying value, including goodwill, no impairment is recognized. However, if the carrying amount, including
goodwill, exceeds fair value, an impairment loss is recognized in an amount equal to the excess, limited to the total goodwill balance.
We have not recognized any impairment on goodwill during the years ended December 31, 2024, 2023, and 2022.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 70–71)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, Americas Best Value Inn tests goodwill for impairment annually. They may also test more frequently if circumstances suggest the fair value of the goodwill is less than its carrying amount.
The impairment test may begin with an assessment of qualitative factors. If this assessment indicates that the fair value, including goodwill, is likely less than its carrying amount, or if the company chooses to bypass the qualitative assessment, a quantitative assessment is performed. The quantitative assessment involves calculating an estimated fair value based on projected future cash flows and comparing it to the carrying amount, including goodwill.
If the estimated fair value exceeds the carrying value, including goodwill, no impairment is recognized. However, if the carrying amount, including goodwill, exceeds the fair value, an impairment loss is recognized. This loss is equal to the excess, but it is limited to the total goodwill balance. The FDD states that Americas Best Value Inn had not recognized any impairment on goodwill during the years ended December 31, 2024, 2023, and 2022.