What costs does 360 Painting expense as incurred related to software development?
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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, the company expenses certain costs related to software development as they are incurred. Specifically, costs incurred during the preliminary project and post-implementation stages of developing internally used software platforms are expensed.
This means that 360 Painting does not capitalize all software development costs. Instead, they follow FASB ASC 350-40, "Internal-Use Software", which dictates that costs from the preliminary project and post-implementation phases are immediately expensed rather than being treated as long-term assets. This accounting treatment can impact 360 Painting's financial statements, as it affects the timing of when these expenses are recognized.
For a prospective 360 Painting franchisee, this information is relevant for understanding the financial management practices of the company. While it doesn't directly impact the franchisee's day-to-day operations, it provides insight into how 360 Painting manages its software investments and reports its financial performance. Franchisees may want to inquire further about the specific types of software platforms being developed and the scale of investment in these projects to better understand the company's technology strategy.