How does 360 Painting amortize deferred loan costs?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
o the quantitative impairment test. The Company chose to perform a qualitative impairment test for goodwill as of December 31, 2024 and 2023. The Company determined the fair value of goodwill exceeds the carrying value and no further analysis is required as of December 31, 2024 and 2023.
Deferred Loan Costs
In accordance with FASB ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs", the Company defers certain loan costs, which are presented as a reduction of long-term debt on the consolidated balance sheets. These costs are a
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 FDD, 360 Painting defers certain loan costs, presenting them as a reduction of long-term debt on their consolidated balance sheets. These deferred costs are then amortized over the term of the debt using the straight-line method, which the company states approximates the effective interest method.
For the years ending December 31, 2024, and 2023, the amortization of these deferred loan costs amounted to $91,061 and $79,207, respectively. These amounts are included as part of the interest expense reported on the consolidated statements of operations.
This accounting treatment means that 360 Painting spreads the cost of obtaining loans over the life of the loan, rather than recognizing the entire expense upfront. This approach can provide a more accurate picture of the company's financial performance over time by matching the expense with the benefit derived from the loan. For a prospective franchisee, understanding these accounting practices can provide insight into how 360 Painting manages its finances and reports its financial results.