What method does Dollar Rent A Car use to amortize long-lived assets?
Dollar_Rent_A_Car Franchise · 2025 FDDAnswer from 2025 FDD Document
Long-lived Assets
Long-lived assets are amortized using the straight-line method over the estimated economic lives of the assets, which range from one to forty years. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets that management expects to hold and use is based on the estimated fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying value or estimated fair value less costs to sell.
Source: Item 23 — RECEIPTS (FDD pages 102–301)
What This Means (2025 FDD)
According to Dollar Rent A Car's 2025 Franchise Disclosure Document, long-lived assets are amortized using the straight-line method. The estimated economic lives of these assets range from one to forty years.
This means that Dollar Rent A Car allocates the cost of its long-lived assets (such as property, equipment, and vehicles) evenly over their useful life. For instance, if a piece of equipment costs $40,000 and has a useful life of 10 years, Dollar Rent A Car will recognize $4,000 as depreciation expense each year.
Dollar Rent A Car reviews these assets for impairment whenever events or changes in circumstances suggest that the carrying value may not be recoverable. Recoverability is based on estimates of undiscounted future cash flows from the asset's use and eventual disposition. If the asset's fair value is less than its carrying value, an impairment loss is recognized. For assets slated for disposal, they are reported at the lower of their carrying value or estimated fair value, less costs to sell.