Where are the amortization of capitalized software costs recognized on 360 Painting's consolidated financial statements?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company capitalizes certain costs incurred in the development of various internally used software platforms, in accordance with FASB ASC 350-40, "Internal-Use Software", which requires certain costs incurred during the application development stage be capitalized and other costs incurred during the preliminary project and post-implementation stages be expensed as they are incurred. The Company capitalizes software development costs when the preliminary project stage is completed and the technological feasibility is established. Capitalized costs include personnel and related expenses for employees and third-party contractors who are directly associated with and who devote time to internal-use software projects. Any costs incurred to significantly upgrade or enhance the Company's software platforms are also capitalized. Costs related to the preliminary project activities and post-implementation support activities are expensed as incurred. Amortization of capitalized software costs accounted for in accordance with FASB ASC 350-40 and ASC 985-20 are recognized in depreciation and amortization on the consolidated financial statements using a straight-line method over an estimated useful life of one to two years.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 FDD, 360 Painting capitalizes certain costs related to the development of internally used software platforms. These costs are capitalized in accordance with FASB ASC 350-40, "Internal-Use Software", which dictates that costs incurred during the application development stage are capitalized, while costs from the preliminary project and post-implementation stages are expensed as they are incurred.
360 Painting capitalizes software development costs once the preliminary project stage is complete and technological feasibility is established. These capitalized costs include personnel and related expenses for employees and third-party contractors directly involved in internal-use software projects. Any significant upgrades or enhancements to the software platforms are also capitalized.
The amortization of these capitalized software costs, accounted for under FASB ASC 350-40 and ASC 985-20, is recognized as depreciation and amortization on 360 Painting's consolidated financial statements. This amortization is calculated using a straight-line method over an estimated useful life of one to two years.