How does Afuri Ramen Dumpling amortize website development costs?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
Intangible asset – Website development is stated at cost less accumulated amortization. Amortization is recorded using the straight-line method over the estimated useful lives of the respective assets (3 years). The intangible asset was not placed in service as of December 31, 2021, thus there was no accumulated amortization at December 31, 2021.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, website development costs are considered an intangible asset and are recorded at cost less accumulated amortization. Amortization, which is the process of gradually writing off the initial cost of an asset, is calculated using the straight-line method over an estimated useful life of three years.
This means that Afuri Ramen Dumpling spreads the cost of its website development evenly over three years for accounting purposes. The FDD states that the intangible asset (website) was not yet placed in service as of December 31, 2021, so there was no accumulated amortization recorded at that time.
For a prospective franchisee, this accounting practice is relevant because it affects the company's financial statements, which provide insight into the financial health and stability of Afuri Ramen Dumpling. Understanding how the company handles its assets and expenses can help franchisees assess the overall risk and potential of investing in the franchise.