What was the value of Budget's rental vehicles in 2023 before accumulated depreciation was subtracted?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
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| (30) |
| Currency translation adjustments and other | | (3) | $ 523 | $ 1.071 | | Goodwill as of December 31, 2024 | $ | 548 | $ 523 | 3 1,071 | | Goodwill as of December 51, 2027 | | | | |
8. Vehicle Rental Activities
The components of vehicles, net within assets under vehicle programs are as follows:
| 2024 | 2023 |
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Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the value of rental vehicles in 2023, before subtracting accumulated depreciation, was $23,114 million. After accumulated depreciation of $2,639 million was subtracted, the net value was $20,475 million. This figure represents the cost of Budget's rental vehicle fleet before accounting for depreciation.
For a prospective Budget franchisee, understanding the value and depreciation of rental vehicles is crucial. The initial cost of vehicles is recorded net of incentives and allowances from manufacturers. Budget acquires vehicles through repurchase and guaranteed depreciation programs with manufacturers, which minimizes gains or losses when the vehicles are returned. Vehicles outside these programs are depreciated based on estimated residual values, which are regularly evaluated and adjusted.
The depreciation methods used by Budget can significantly impact the franchisee's financial statements. The document states that any adjustments to depreciation are made prospectively. Differences between actual and estimated residual values result in gains or losses recorded as part of vehicle depreciation at the time of sale. This means that accurately estimating residual values and understanding market conditions for used vehicles is essential for Budget's financial planning and reporting.
Vehicle-related interest expense is presented net of vehicle-related interest income. For 2023, this income was $34 million. This netting affects the overall financial picture, and franchisees should be aware of how these items are accounted for. Additionally, vehicles classified as held for sale are presented separately at the lower of carrying amount or fair value less costs to sell and are no longer depreciated, requiring franchisees to understand the criteria for this classification and its impact on financial reporting.