Under what circumstances does Best Western review long-lived assets for impairment?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. The Company has not recognized any impairments during the years ended November 30, 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, Best Western reviews long-lived assets for impairment whenever events or changes in circumstances suggest that the carrying amount of an asset may not be recoverable. The recoverability of these assets is determined by comparing the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by the asset.
If Best Western considers the assets to be impaired, the impairment recognized is the amount by which the carrying amount of the assets exceeds their estimated fair value. This process helps Best Western ensure that the value of its assets reported on its financial statements accurately reflects their current worth and potential future earnings.
For a prospective franchisee, this means that Best Western regularly assesses whether its assets, like property or equipment, are still worth what is stated on the books. If an asset's value has declined significantly due to market changes or other factors, Best Western will recognize this loss, which can affect the company's overall financial health. However, the FDD states that Best Western has not recognized any impairments during the years ended November 30, 2024 and 2023.