Royal Caribbean Cruises Ltd. has recently released its 10-K report, detailing its operations as a global cruise company. As of December 31, 2025, the company operated 69 ships under the Royal Caribbean International, Celebrity Cruises, and Silversea Cruises brands, offering a variety of itineraries. The company was founded in 1968 and is headquartered in Miami, Florida.
In its 10-K report, Royal Caribbean Cruises Ltd. highlighted its critical accounting policies and estimates, particularly focusing on ship accounting, valuation of goodwill, indefinite-lived intangible assets, and long-lived assets, as well as derivative instruments.
Regarding ship accounting, the company's most significant assets, the ships, are stated at cost less accumulated depreciation and amortization. The depreciation of ships is computed using the straight-line method over the estimated useful life of the asset, generally 30-35 years. The company also reviews estimated useful lives and residual values for ongoing reasonableness and employs a cost allocation methodology at the component level.
The report also discussed the valuation of goodwill, indefinite-lived intangible assets, and long-lived assets. The company reviews goodwill and indefinite-lived intangible assets for impairment annually or more frequently if necessary, using a qualitative and, if necessary, a quantitative impairment assessment. The impairment review for long-lived assets is conducted whenever events or changes in circumstances indicate that the carrying value of these assets may not be fully recoverable.
Additionally, Royal Caribbean Cruises Ltd. detailed its use of derivative instruments to manage interest rate exposure and limit exposure to fluctuations in foreign currency exchange rates and fuel prices. The company enters into various forward, swap, and option contracts, recording them on the balance sheet at their fair value.
The 10-K report provides a comprehensive insight into Royal Caribbean Cruises Ltd.'s financial condition and operations, shedding light on its critical accounting policies, asset valuation, and risk management strategies. The market has reacted to these announcements by moving the company's shares -0.76% to a price of $276.01. For more information, read the company's full 10-K submission here.
