What was the amortization of operating lease right-of-use assets for 1 800 Packouts in 2023?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
----|--------------------| | Cost of revenues | | 10,001,056 | 5,463,228 | | Gross profit | | 24,596,601 | 20,563,296 | | Operating expenses: | | | | | Selling, general and administrative | | 20,522,378 | 18,837,743 | | Depreciation and amortization | | 11,307,800 | 10,597,574 | | Total operating expenses | _ | 31,830,178 | 29,435,317 | | Loss from operations | | (7,233,577) | (8,872,021) | | Other income (expense): | | | | | Interest expense | | (5,506,427) | (3,821,499) | | Gain on sale of unconsolidated subsidiary | | - | 1,025,637 | | Other income (expense) | | (204,868) | (51,463) | | Total other expense, net | | (5,711,295) | (2,847,325) | | Loss before income taxes | | (12,944,872) | (11,719,346) | | Income tax benefit (provision) | | (765,698) | 1,280,676 | | Net loss | $ | (13,710,570) | $ (10,438,670) |
| For the Year | s Ende | ed December 31, | ||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Cash flows from operating activities: | ||||
| Net loss | $ | (13,710,570) | $ | (10,438,670) |
| Adjustments to reconcile net loss to net cash used in | ||||
| operating activities: | 44 470 440 | 40.550.470 | ||
| Amortization of goodwill and intangible assets Depreciation of fixed assets | 11,179,1 |
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts' 2025 Franchise Disclosure Document, the amortization of operating lease right-of-use assets for the year 2023 was $265,177. This figure reflects the expense recognized during the year for the use of leased assets, which are recorded as right-of-use (ROU) assets on the balance sheet. These assets typically relate to leased office spaces or other facilities used in the operation of the 1 800 Packouts business.
The accounting standard ASC Topic 842 requires companies to recognize lease assets and liabilities on the balance sheet for most leases. This means that 1 800 Packouts records an asset representing the right to use the leased space and a corresponding liability representing the obligation to make lease payments. The amortization of the ROU asset is the systematic allocation of the asset's cost over its useful life, which is typically the lease term. This amortization expense is recognized on the income statement and reflects the consumption of the leased asset over time.
For a prospective 1 800 Packouts franchisee, understanding the amortization of operating lease right-of-use assets is important for assessing the company's financial performance and cash flows. It provides insight into the cost of leasing facilities and how these costs are recognized over time. Additionally, the FDD states that as of December 31, 2023, the weighted average remaining on the original lease terms was 5.5 years, and the weighted average incremental borrowing rate used was 5.79%. This information can be useful in evaluating the company's lease obligations and the potential impact of future lease payments on its financial results.