Under what circumstances does Crowne Plaza evaluate property and equipment for recoverability?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
Recoverability of Property and Equipment
The Company evaluates property and equipment and other long-lived assets for recoverability when changes in circumstances indicate the carrying value may not be recoverable; for example, when there are 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 indicators of impairment are present, estimated undiscounted future cash flows from related operations are compared with the current carrying values of the long-lived assets. If these assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Fair value is based on estimated discounted future cash flows.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza FDD, the company assesses the recoverability of its property and equipment when certain changes in circumstances suggest that the current carrying value of these assets may not be recoverable. These 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 any of these indicators of impairment are present, Crowne Plaza compares the estimated undiscounted future cash flows from related operations with the current carrying values of the long-lived assets. This comparison helps determine whether the assets are impaired.
If the assets are indeed considered impaired, the impairment is measured by calculating the amount by which the carrying amount of the assets exceeds their fair value. The fair value, in turn, is based on estimated discounted future cash flows. This process ensures that the value of the property and equipment reflected on the company's financial statements accurately reflects their recoverable value under the prevailing circumstances.