As of what date was the recoverability test performed by Budget?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
unted future cash flows expected to be generated by the asset. Assets are grouped at the lowest level of identifiable cash flows. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the
During the fourth quarter of 2024, we changed our fleet strategy, specific to United States and Canadian rental car vehicles, to accelerate certain fleet rotations in order to decrease the age of our fleet for competitive reasons, and accordingly, we shortened the useful life associated with such vehicles. We considered this change in strategy to be a triggering event that indicated the carrying amount of these assets may not be recoverable. As a result, we performed a recoverability test by comparing the sum of undiscounted cash flows expected to result from the use and eventual disposition of the impacted assets may not be recoverable. As a result, we performed a recoverability test by comparing the sum of undiscounted cash flows expected to result from the use and eventual disposition of the impacted assets. vehicles to their carrying value and concluded, that for certain vehicles, the carrying value exceeded the sum of undiscounted cash flows expected to result from the use and eventual disposition of those venicies to meir carrying value and concluded, that for certain venicies, the carrying value exceeded the sum of undiscounted cash flows expected to result from the use and eventual disposition of those vehicles. For purposes of the recoverability test, the vehicles were aggregated into asset groups based on make, model and year of the vehicles. The test was performed as of November 30, 2024, and used a market approach to determine the value of the impacted vehicles, utilizing prices for similar assets in active markets (Level 2). During the year ended December 31, 2024, we recorded a $2.3 billion non-cash impairment within long-lived asset impairment and other related charges in the Consolidated Statement of Operations within our Americas reportable segment. There were no impairments to longnon-cash impairment within long-lived asset impairment and other related charges in the Consolidated Statement of Operations within our Americas reportable segment. There were no impairment to long-lived assets a long-lived asset is impaired, we will
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, a recoverability test was performed as of November 30, 2024. This test was conducted following a change in Budget's fleet strategy during the fourth quarter of 2024, which involved accelerating fleet rotations for vehicles in the United States and Canada to decrease the fleet's age. This strategic shift was considered a triggering event, indicating that the carrying amount of these assets might not be recoverable.
For the recoverability test, Budget compared the sum of undiscounted cash flows expected from the use and eventual disposition of the impacted vehicles to their carrying value. The vehicles were aggregated into asset groups based on their make, model, and year. The test utilized a market approach to determine the value of the impacted vehicles, using prices for similar assets in active markets (Level 2).
The results of the recoverability test led Budget to conclude that, for certain vehicles, the carrying value exceeded the sum of undiscounted cash flows. Consequently, during the year ended December 31, 2024, Budget recorded a $2.3 billion non-cash impairment within long-lived asset impairment and other related charges in the Consolidated Statement of Operations within their Americas reportable segment. This impairment charge reflects the adjustment made to the carrying value of the long-lived assets due to the change in fleet strategy and the subsequent recoverability test.