Under what circumstances does Crowne Plaza review contract assets for impairment?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
Contract assets are reviewed for impairment when 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 income statement based on the difference between the carrying value and the estimated 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 Crowne Plaza's 2025 Franchise Disclosure Document, contract assets are reviewed for impairment when specific conditions arise. These assets, which typically represent amounts Crowne Plaza pays at the beginning of a contract, are assessed to determine if their carrying value is still recoverable.
The review process is triggered by "events or changes in circumstances" that suggest the recorded value of the contract asset may not be fully recoverable in the future. If these indicators are present, Crowne Plaza estimates the future undiscounted cash flows expected from the contract.
Should the estimated undiscounted cash flows be less than the carrying value of the asset, Crowne Plaza recognizes an impairment loss. This loss is calculated as the difference between the asset's carrying value and its estimated fair value, with the fair value determined based on discounted future cash flows. This impairment loss is then charged to the consolidated statements of net income.