How often does Best Western evaluate the potential impairment of goodwill and other intangible assets?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
gies, and trademarks and trade names resulting from business acquisitions. Other intangible assets are valued based on their acquisition date fair values and, other than trademarks and trade names which are indefinite-lived, are amortized using the straight-line method over their estimated useful lives, ranging from 7.5 years to 10 years. Other intangible assets are included in other assets, net in the Consolidated Statements of Financial Position.
The Company evaluates the potential impairment of goodwill and other intangible assets annually. In evaluating these assets for impairment, the Company may elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit or the intangible assets is less than its carrying amount. If the conclusion is that the fair value of the assets is not more likely than not less than its carrying value, then no further
November 30, 2024
testing is required. If the conclusion is that the fair value of the assets is more likely than not less than its carrying value, then a quantitative impairment test is performed. For intangible assets, if the carrying value is greater than the fair value of the assets, an impairment charge is recognized for this excess. The Company may elect to forgo the qualitative assessment and move directly to the quantitative impairment tests for goodwill and other intangible assets. The Company determines the fair value of its reporting units and intangible assets using income and market methods.
Goodwill has been allocated to two reporting units: (i) WorldHotels, and (ii) AutoClerk. The Company performed a quantitative impairment analysis for the WorldHotels reporting unit in both 2024 and 2023.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, the company evaluates the potential impairment of goodwill and other intangible assets on an annual basis. In assessing these assets for impairment, Best Western may initially choose to evaluate qualitative factors to determine if it is more likely than not that the fair value of the reporting unit or intangible assets is less than their carrying amount. If the fair value is likely greater than the carrying value, no further testing is needed.
However, if the fair value is likely less than the carrying value, a quantitative impairment test is then performed. For intangible assets, if the carrying value exceeds the fair value, an impairment charge is recognized for the difference. Best Western can also opt to skip the qualitative assessment and proceed directly to quantitative impairment tests for goodwill and other intangible assets. The fair value of reporting units and intangible assets is determined using income and market methods.
For example, in 2024 and 2023, Best Western performed a quantitative impairment analysis for the WorldHotels reporting unit and determined that the fair value exceeded the carrying value, resulting in no recorded impairment. During the same period, a qualitative impairment analysis for the AutoClerk reporting unit concluded that the fair value was likely greater than its carrying amount. This annual evaluation process helps Best Western ensure that the value of its assets is accurately reflected in its financial statements.