How much did Afuri Ramen Dumpling spend on purchases of property and equipment in 2020?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
Accounts receivable – Accounts receivable from franchisees are generally unsecured. Management charges a 5% late fee and 1.5% interest per month on unpaid balances. No revenue was recognized for the years ended December 31, 2021 and 2020, related to these charges. The Company establishes an allowance based on experience and analysis of specific franchisees, taking into consideration the age of past due accounts and an assessment of the franchisee's ability to pay. Management considers all accounts receivables to be collectible; therefore, no allowance has been established for doubtful accounts. There was no bad debt expense for the years ended December 31, 2021 and 2020.
Property and equipment – Property and equipment are stated at cost less accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective assets (5 years). Improvements which increase the useful life of property and equipment and replacements of major components property and equipment are capitalized while maintenance, repairs, and minor replacements are expensed as incurred.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, the financial statements include information up to December 31, 2021, and 2020. The document outlines the company's accounting policies regarding property and equipment, stating that these are recorded at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over an estimated useful life of five years for the respective assets. The FDD also specifies that improvements that extend the useful life of the assets are capitalized, while general maintenance, repairs, and minor replacements are expensed as they are incurred.
However, the FDD does not explicitly state the exact amount Afuri Ramen Dumpling spent on purchases of property and equipment in 2020. Instead, it provides the framework for how such expenditures are accounted for within the company's financial statements.
For a prospective franchisee, this means that while the FDD offers insight into the company's accounting practices, additional inquiry would be needed to determine the specific capital expenditures on property and equipment for a given year. It would be prudent to ask the franchisor directly for this information to gain a clearer understanding of the company's investment trends.