What depreciation method does Basecamp Fitness use for financial statement purposes?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
Property and Equipment and Depreciation Methods
Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized, and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The estimated useful lives for furniture, equipment, and auto and trucks are 5 to 7 years. Depreciation of leasehold improvements is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements.
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, the company uses the straight-line method for depreciation in its financial statements. This method is applied to the estimated useful lives of the related assets. For furniture, equipment, and autos and trucks, the estimated useful lives are between 5 to 7 years.
For leasehold improvements, Basecamp Fitness computes depreciation using the straight-line method over the shorter period of either the remaining lease term or the estimated useful lives of the improvements. This means that the cost of these improvements is spread evenly over their useful life or the remaining term of the lease, whichever is shorter.
This depreciation method impacts franchisees because it affects the reported expenses and profitability of Basecamp Fitness's corporate-owned studios, which are subject to the same fee structures as franchised locations. Understanding the depreciation method can help a prospective franchisee better analyze the financial statements provided in the FDD and assess the financial health and stability of the company.