How does Best Western value other intangible assets resulting from business acquisitions?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
sents the excess of the cost of an acquired entity over the net fair value amounts that were assigned to the identifiable assets acquired and the liabilities assumed. Goodwill is amortized on a straight-line basis over a ten-year useful life and is tested for impairment if circumstances indicate that the goodwill carrying value may exceed its fair value. Goodwill is included in other assets, net in the Consolidated Statements of Financial Position.
Other intangible assets include acquired customers, developed technologies, 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.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, the company values other intangible assets like acquired customers, developed technologies, trademarks, and trade names resulting from business acquisitions based on their acquisition date fair values. Trademarks and trade names are considered indefinite-lived and are not amortized. Other intangible assets are amortized using the straight-line method over their estimated useful lives, which range from 7.5 to 10 years. These assets are included in other assets, net, on the Consolidated Statements of Financial Position.
Best Western evaluates these assets for potential impairment annually, and may first assess qualitative factors to determine if 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 fair value of the assets is not less than its carrying value, no further action is needed.
In the case of the WorldHotels acquisition, trademarks and trade names were valued at $1.3 million as of November 30, 2024 and 2023. The company uses third-party specialists to determine the estimated fair value for other intangible assets. For example, acquired customers and trademarks and trade names were valued at $2.1 million and $1.3 million, respectively, as of November 30, 2024. The total purchase price was allocated based on historical financial statements and management's estimates of fair value.