Under what circumstances does Springhill Suites By Marriott evaluate an intangible asset for impairment?
Springhill_Suites_By_Marriott Franchise · 2025 FDDAnswer from 2025 FDD Document
We evaluate an intangible asset for impairment when changes in circumstances indicate that we may not be able to recover the carrying value; for example, when there are material adverse changes in projected revenues or expenses, significant under performance relative to historical or projected operating results, or significant negative industry or economic trends. If indicators of impairment are identified, we test the intangible asset for impairment by comparing its carrying value to the consideration that we expect to receive in the future and that we have received but have not recognized as revenue, in exchange for the goods or services to which the asset relates ("the future consideration"), less the costs that relate directly to providing those goods or services and that have not been recognized as expenses. If the comparison indicates that the carrying value of the asset is less than the future consideration less the related expenses, we recognize an impairment loss for the difference. No impairment charges have been recorded during the years ended December 31, 2024, 2023, or 2022.
Source: Item 17 — , "Renewal, Termination, Transfer, and Dispute Resolution," is amended by the addition of the following paragraph(s) at the conclusion of the Item: (FDD pages 285–553)
What This Means (2025 FDD)
According to Springhill Suites By Marriott's 2025 Franchise Disclosure Document, the company assesses intangible assets for impairment when there are indications that the carrying value of the asset may not be recoverable. These indicators include material adverse changes in projected revenues or expenses, significant underperformance compared to historical or projected operating results, or significant negative trends in the industry or economy.
If any of these indicators are present, Springhill Suites By Marriott tests the intangible asset for impairment. This test involves comparing the asset's carrying value to the future consideration expected to be received in exchange for the related goods or services, less any associated costs that have not yet been recognized as expenses. Future consideration refers to the amounts the company expects to receive and has already received but not yet recognized as revenue.
If the comparison reveals that the carrying value of the intangible asset exceeds the future consideration less related expenses, Springhill Suites By Marriott recognizes an impairment loss. The loss is recorded for the difference between the carrying value and the recoverable amount. The FDD states that no impairment charges were recorded during the years ended December 31, 2024, 2023, or 2022.