What are Corcoran's other indefinite-lived intangible assets primarily comprised of?
Corcoran Franchise · 2025 FDDAnswer from 2025 FDD Document
Operations, is computed utilizing the straight-line method over the estimated useful lives of the related assets. Amortization of leasehold improvements, also recorded as a component of depreciation and amortization, is computed utilizing the straight-line method over the estimated benefit period of the related assets or the lease term, if shorter. Useful lives are 30 years for buildings, up to 20 years for leasehold improvements, and from 3 to 7 years for furniture, fixtures and equipment.
The Company capitalizes the costs of software developed for internal use which commences during the development phase of the project. The Company amortizes software developed or obtained for internal use on a straight-line basis, generally from 1 to 5 years, when such software is ready for use. The net carrying value of software developed or obtained for internal use was $127 million and $134 million at December 31, 2024 and 2023, respectively.
LEASES
See Note 6, "Leases", for discussion.
IMPAIRMENT OF GOODWILL, INTANGIBLE ASSETS AND OTHER LONG-LIVED ASSETS
Goodwill represents the excess of acquisition costs over the fair value of the net tangible assets and identifiable intangible assets acquired in a business combination. Other indefinite-lived intangible assets primarily consist of trademarks acquired in business combinations. Goodwill and other indefinite-lived assets are not amortized but are subject to impairment testing. The aggregate carrying values of our goodwill and other indefinite-lived intangible assets were $2,499 million and $614 million, respectively, at December 31, 2024 and are subject to an impairment assessment annually as of October 1, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable.
In testing goodwill, the fair value of each reporting unit is estimated using the income approach, a discounted cash flow method. For the other indefinite lived intangible assets, fair value is estimated using the relief from royalty method. Management utilizes long-term cash flow forecasts and the Company's annual operating plans adjusted for terminal value assumptions.
Source: Item 23 — RECEIPTS (FDD pages 75–276)
What This Means (2025 FDD)
According to Corcoran's 2025 Franchise Disclosure Document, the company's other indefinite-lived intangible assets primarily consist of trademarks acquired in business combinations. These assets, along with goodwill, are not amortized but are subject to impairment testing. At the end of 2024, the aggregate carrying value of Corcoran's other indefinite-lived intangible assets was $614 million.
Corcoran conducts an impairment assessment annually, or when circumstances suggest the carrying amount may not be recoverable. For these indefinite-lived intangible assets, the fair value is estimated using the relief from royalty method. This method relies on factors such as future revenues, operating expenses, market conditions, and assumptions about discount rates, cost of capital, trademark royalty rates, and long-term growth rates.
In 2023, an impairment analysis led to a $25 million impairment of franchise trademarks. However, the FDD states that the impairment analysis performed in the fourth quarter of 2024 showed no impairment of goodwill or other indefinite-lived intangible assets for the year ended December 31, 2024. This indicates that while these assets are subject to impairment, their value can fluctuate based on market conditions and company performance.