What range of useful lives are used to depreciate computers, equipment, furniture, and fixtures for Benihana?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
Computers and equipment as well as furniture and fixtures are depreciated over their useful lives from three to fifteen years. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the remaining term of the associated lease. Lease terms begin on the date the Company takes possession under the lease and include option periods where failure to exercise such options would result in an economic penalty.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the company depreciates computers, equipment, furniture, and fixtures over a useful life ranging from three to fifteen years. This means that the cost of these assets is spread out as an expense over a period of 3 to 15 years for accounting purposes.
Depreciation is calculated using the straight-line method, meaning an equal amount of depreciation expense is recognized each year during the asset's useful life. This method provides a consistent and predictable expense recognition for these assets.
For a prospective Benihana franchisee, understanding the depreciation timeline is important for financial planning and forecasting. It affects the reported profitability of the business, as depreciation is a non-cash expense that reduces taxable income. The depreciation of leasehold improvements is determined by whichever is shorter: the estimated useful life of the improvements or the remaining term of the lease, including option periods where failure to exercise such options would result in an economic penalty.