How are property and equipment assets valued on the financial statements for Americas Best Value Inn?
Americas_Best_Value_Inn Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. The cost of improvements that extend the life of property and equipment are capitalized. Repairs and maintenance charges are recognized as an expense as incurred.
Depreciation expense for property and equipment was $0.2 million, $1.4 million and $3.2 million, for the years ended December 31, 2024, 2023 and 2022 respectively. We retired $0.1 million and $3.4 million of fully depreciated assets for the years ended December 31, 2024 and 2023. The depreciation impact of sold assets was $0.4 million.
| Asset Description | 2 | 2024 | 2 | 023 | Estimated Useful Lives |
|---|---|---|---|---|---|
| Building improvements | 610 | 641 | Up to 40 years | ||
| Furniture and fixtures | 528 | 892 | Up to 10 years | ||
| Landscaping and land improvements | 4 | 25 | Lesser of useful life or remaining lease term | ||
| Construction in progress | 537 1,679 | 58 1,616 | N/A | ||
| Accumulated depreciation | (501) | (800) | |||
| Property and equipment, net | $ | 1,178 | $ | 816 |
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 states that property and equipment are recorded at cost, less accumulated depreciation. Any improvements that extend the life of the assets are capitalized, meaning their cost is added to the asset's book value and depreciated over the extended life. Routine repairs and maintenance are expensed as they are incurred.
For the years ending December 31, 2024, 2023 and 2022, depreciation expense for property and equipment totaled $0.2 million, $1.4 million and $3.2 million, respectively. During 2024 and 2023, Americas Best Value Inn retired $0.1 million and $3.4 million of fully depreciated assets, respectively. The depreciation impact of sold assets was $0.4 million.
The net value of property and equipment was also reported in the balance sheets. As of December 31, 2024, the net property and equipment was $1,178,000, compared to $816,000 as of December 31, 2023. The assets that comprise property and equipment include building improvements, furniture and fixtures, landscaping and land improvements, and construction in progress. Building improvements are depreciated over up to 40 years, while furniture and fixtures are depreciated over up to 10 years. Landscaping is depreciated over the lesser of its useful life or the remaining lease term.