When does Batteries Plus Bulbs begin amortizing internal-use software?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
with them. Amounts are written off when receivables are determined to be uncollectible. In 2024 and 2023, the Company recorded a charge of $0 and $505, respectively. Interest income on notes receivable is recognized using the effective-interest method.
Property and Equipment
Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Estimated useful lives range from three to ten years for furniture, fixtures and equipment, five years for vehicles, five to ten years for leasehold improvements and three to seven years for software.
Source: Item 21 — Financial Statements (FDD pages 79–80)
What This Means (2025 FDD)
According to Batteries Plus Bulbs' 2025 Franchise Disclosure Document, costs related to internal-use software are initially expensed as they are incurred. Once the preliminary project stage is complete and it is probable that the software will be used, these costs are then capitalized and amortized over the software's estimated useful life. The estimated useful lives for software range from three to seven years.
For a prospective Batteries Plus Bulbs franchisee, this accounting policy means that the company does not immediately recognize the costs of developing internal software as an asset. Instead, these costs are treated as expenses in the beginning. This approach may provide a more conservative view of the company's financial performance during the software development phase.
Once the software development reaches a stage where its use is probable, the accumulated costs are then recognized as an asset and gradually expensed over its useful life through amortization. This method aligns the expense recognition with the period in which the software is expected to generate benefits. The amortization period of three to seven years is a standard range for software, reflecting its typical lifespan before becoming obsolete or requiring significant updates.