How does Basecamp Fitness recognize lease expenses related to short-term leases?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company leases various facilities. For any lease with an initial term in excess of 12 months, the related leased asset and liability are recognized on the consolidated balance sheets as operating leases at the inception of an agreement where it is determined that a lease exists. The Company has elected to exclude short-term leases for all classes of underlying assets from consolidated balance sheets recognition. A lease is considered to be short-term if it contains a lease term of 12 months or less. Lease expense related to short term leases is recognized on a straight-line basis over the term of the lease. The Company may enter into leases that contain both lease and nonlease components. The Company has elected to not combine lease and nonlease components for all asset classes.
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, the company has elected to exclude short-term leases from consolidated balance sheet recognition for all classes of underlying assets. A lease is considered short-term if its term is 12 months or less.
For these short-term leases, Basecamp Fitness recognizes the lease expense on a straight-line basis over the term of the lease. This means the total lease expense is divided evenly across the lease term, so the same amount is recorded each month or period.
Basecamp Fitness may enter into leases that contain both lease and non-lease components, and has elected not to combine these components for all asset classes. This accounting treatment provides a consistent and simplified approach to handling short-term lease expenses, avoiding the complexities of capitalizing and amortizing these leases on the balance sheet.