Under what circumstances does Crowne Plaza evaluate the carrying value of its assets for impairment?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company evaluates the carrying value of these assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the estimated undiscounted cash flows are less than carrying value, an impairment loss is charged to the consolidated statements of net income based on the difference between the carrying value and the estimated fair value. Fair value is based on estimated discounted future cash flows.
Revenue Recognition
Revenue is recognized at an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer.
Fee business revenue
Under franchise agreements, the Company's performance obligation is to provide a license to use the Company's trademarks and other intellectual property. Franchise royalty fees are typically charged as a percentage of hotel gross rooms revenues and are treated as variable cons
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, the company evaluates the carrying value of intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the estimated undiscounted cash flows are less than the carrying value, Crowne Plaza charges an impairment loss to the consolidated statements of net income. This loss is based on the difference between the carrying value and the estimated fair value, which is determined using estimated discounted future cash flows.
Similarly, Crowne Plaza assesses property and equipment for recoverability when changes in circumstances suggest that the carrying value may not be recoverable. Examples of such circumstances include material adverse changes in projected revenues or expenses, significant underperformance relative to historical or projected operating results, and significant negative industry or economic trends. If these indicators are present, the company compares estimated undiscounted future cash flows from related operations with the current carrying values of the long-lived assets.
For capitalized software, which is included in property and equipment, Crowne Plaza conducts an annual evaluation for recoverability and reassesses the ongoing value of its technology platform. This annual review ensures that the recorded value of the software aligns with its expected future benefits. The company also reviews contract costs for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable with reference to the future expected cash flows from the contract. The process for determining and recognizing impairment loss is the same as for intangible assets and property and equipment, focusing on the difference between carrying value and estimated fair value based on discounted future cash flows.