When does Budget review long-lived assets for impairment?

According to Budget's 2025 Franchise Disclosure Document, Budget reviews long-lived assets for impairment when events or changes in circumstances indicate that the carrying value of these assets may exceed their current fair values. This means that Budget doesn't just conduct impairment reviews on a set schedule, but also when specific events or changes suggest that an asset's recorded value is higher than what it's actually worth.

The document further explains that recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted 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 fair value of the assets.

For a prospective Budget franchisee, this policy is important because it affects how Budget values its assets, which in turn impacts the company's financial statements. If Budget frequently recognizes impairment charges, it could signal that the company's assets are not performing as expected, or that market conditions are negatively affecting their value. This could impact a franchisee's investment and the overall financial health of the franchise system. Franchisees should pay attention to these charges as an indicator of the company's financial management and the performance of its assets.