What was the amount of additional deferred acquisition costs incurred by Beauty Bungalows?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
performance obligation of the Company's franchise agreements.
A summary of acquisition costs incurred as of December 31, 2024 and 2023 is as follows:
| Deferred acquisition costs - beginning | $ | 115,783 | $ - |
|---|---|---|---|
| Additional costs incu |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, the company incurred $209,500 in additional deferred acquisition costs during the period examined in their financial statements. These costs are related to securing franchise agreements.
Deferred acquisition costs represent expenses Beauty Bungalows has incurred but will recognize over a longer period. Instead of expensing the full $209,500 immediately, Beauty Bungalows will spread the expense over the life of the franchise agreements. This accounting practice aligns the expense with the revenue generated from those franchise agreements.
For a prospective Beauty Bungalows franchisee, this figure provides insight into the company's investment in securing new franchisees. It reflects the costs Beauty Bungalows is willing to bear to expand its franchise network. The deferred acquisition costs recognized during the period was ($12,626). The beginning deferred acquisition costs were $115,783 and the ending deferred acquisition costs were $312,657.