Does Embassy Suites use the fair value measurement option for any of its financial assets or liabilities?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
ement in its entirety. Proper classification of fair value measurements within the valuation hierarchy is considered each reporting period. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts.
Estimates of the fair values of our financial instruments and nonfinancial assets are determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values and the classification within the valuation hierarchy.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 97)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, Embassy Suites has not elected the fair value measurement option for any of its financial assets or liabilities. This means that Embassy Suites does not choose to measure certain assets and liabilities at their fair value on a recurring basis, even if changes in fair value are not immediately recognized in earnings. Instead, they use other accounting methods to value these items.
For a prospective franchisee, this indicates that Embassy Suites's financial statements are prepared using accounting methods that may not reflect the most up-to-date market values of certain assets and liabilities. While this is permitted under accounting standards, it's important for franchisees to understand that the carrying values of these items may differ from their actual market values. This can affect how a franchisee interprets Embassy Suites's financial position and performance.
Furthermore, the FDD clarifies that the fair values of Embassy Suites's financial assets and liabilities are estimated to be equal to their carrying values as of December 31, 2024, and 2023. This suggests that there were no significant differences between the recorded values and the estimated fair values of these items during those periods. However, it is important to note that these are estimates, and actual fair values could differ. Prospective franchisees should consider these factors when reviewing Embassy Suites's financial statements and assessing the overall financial health of the company.