How often does Surestay Hotel By Best Western test goodwill for impairment?
Surestay_Hotel_By_Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
in other assets, net in the Consolidated Statements of Financial Position.
The Company evaluates the potential impairment of goodwill and other intangible assets annually. In evaluating these assets for impairment, the Company may elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit or the intangible assets is less than its carrying amount. If the conclusion is that the fair value of the assets is not more likely than not less than its carrying value, then no further
November 30, 2024
testing is required. If the conclusion is that the fair value of the assets is more likely than not less than its carrying value, then a quantitative impairment test is performed. For intangible assets, if the carrying value is greater than the fair value of the assets, an impairment charge is recognized for this excess. The Company may elect to forgo the qualitative assessment and move directly to the quantitative impairment tests for goodwill and other intangible assets. The Company determines the fair value of its reporting units and intangible assets using income and market methods.
Goodwill has been allocated to two reporting units: (i) WorldHotels, and (ii) AutoClerk. The Company performed a quantitative impairment analysis for the WorldHotels reporting unit in both 2024 and 2023. As of November 30, 2024 and November 30, 2023, the Company determined that the fair value of the WorldHotels reporting unit exceeded the carrying value and no impairment was recorded. The Company performed a qualitative impairment analysis for the AutoClerk reporting unit during both 2024 and 2023, concluding that it is more likely than not that the fair value of the reporting unit is greater than its carrying amount (see note 15).
Source: Item 23 — Receipts (FDD pages 88–286)
What This Means (2025 FDD)
According to Surestay Hotel By Best Western's 2025 Franchise Disclosure Document, the company evaluates goodwill and other intangible assets for potential impairment on an annual basis. Best Western may choose to first assess qualitative factors to determine if it is more likely than not that the fair value of the reporting unit or intangible assets is less than its carrying amount. If the fair value is likely not less than the carrying value, no further testing is needed. However, if the fair value is likely less than the carrying value, a quantitative impairment test is performed.
For intangible assets, if the carrying value exceeds the fair value, an impairment charge is recognized for the excess. Best Western has the option to skip the qualitative assessment and proceed directly to quantitative impairment tests for goodwill and other intangible assets. The company determines the fair value of its reporting units and intangible assets using income and market methods.
Goodwill has been allocated to two reporting units: WorldHotels and AutoClerk. In both 2024 and 2023, Best Western performed a quantitative impairment analysis for the WorldHotels reporting unit and determined that its fair value exceeded the carrying value, resulting in no recorded impairment. For the AutoClerk reporting unit, a qualitative impairment analysis was conducted in both 2024 and 2023, concluding that the fair value of the reporting unit was likely greater than its carrying amount.