How does Basecamp Fitness record its property and equipment?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
termine the existence of obsolete, slow-moving, and nonsaleable inventories and records necessary provisions to reduce such inventories to net realizable value.
Prepaid Expenses
Prepaid expenses primarily consist of payments made in advance for goods and services to be received in future periods. As of December 31, 2024 and 2023, prepaid expenses include prepaid interest, prepaid inventory, and other operating prepaid expenses that can be amortized over time. Prepaid expenses are recognized as current assets and amortized over the periods in which the related benefits are realized.
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.
Business Combinations
The Company accounts for business combinations using the acquisition method of accounting, which requires that the assets acquired and the liabilities assumed are measured at fair value at the date of acquisitions.
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized, while minor replacements, maintenance, and repairs are expensed as incurred. When property and equipment are retired or disposed of, their cost and accumulated depreciation are removed from the accounts, with any resulting gain or loss included in the results of operations for that period. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.
The estimated useful lives for furniture, equipment, and autos and trucks are 5 to 7 years. For leasehold improvements, depreciation is computed using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements. This means that a Basecamp Fitness franchisee can expect to depreciate these assets over these timeframes for financial statement purposes.
The FDD also provides a snapshot of Basecamp Fitness's property and equipment. In 2024, leasehold improvements were valued at $5,607,000, equipment at $3,960,000, fitness equipment at $2,507,000, autos and trucks at $309,000, furniture and equipment at $390,000, and construction in progress at $58,000, totaling $12,831,000. Accumulated depreciation was $(9,866,000), resulting in a net property and equipment value of $2,965,000. The 2023 figures were similar, with total property and equipment at $12,847,000 and net value at $3,477,000 after accumulated depreciation of $(9,370,000).
This information is relevant for prospective franchisees as it outlines how Basecamp Fitness accounts for its assets and provides insight into the depreciation methods and timelines used. Understanding these accounting practices can help franchisees better manage their own financial records and plan for capital expenditures and asset replacements. The provided figures also give a sense of the scale of investment Basecamp Fitness itself has made in property and equipment.