How much did Big Blue Swim School spend on software purchases in 2024?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
Costs for software developed for internal use are accounted for in accordance with FASB ASC 350, Intangibles - Goodwill and Other - Internal-Use Software. FASB ASC 350 requires the capitalization of certain costs incurred in connection with developing or obtaining internal-use software. Client-related costs capitalized in accordance with FASB ASC 350 are included in deferred contract costs, while capitalized costs for internal-use software are included in software -net in the accompanying balance sheets. The Company amortizes the costs of software obtained or developed for internal use over five years.
Costs that are incurred in the preliminary project stage are expensed as incurred. Once the capitalization criteria of FASB ASC 350 have been met, the Company capitalizes: external direct costs of materials and services consumed in developing or obtaining internal-use computer software; payroll and payroll-related costs for employees who are directly associated with, and who devote time to, the internal-use computer software project (to the extent of their time spent is directly on the project); and interest costs incurred when developing computer software for internal use.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
Based on the 2025 FDD, Big Blue Swim School's accounting policy for software costs involves capitalizing certain costs related to developing or obtaining internal-use software, in accordance with FASB ASC 350. These capitalized costs are then included as "software -net" on the balance sheets. The company amortizes these software costs over a five-year period. Costs incurred during the preliminary project stage are expensed as they occur.
Once the capitalization criteria are met, Big Blue Swim School capitalizes external direct costs for materials and services, payroll and related costs for employees directly involved in the software project, and any interest costs incurred during the software's development.
However, the provided excerpts from the FDD do not specify the exact amount Big Blue Swim School spent on software purchases in 2024. To obtain this information, prospective franchisees should review the complete financial statements in Exhibit A of the FDD and consider asking the franchisor directly for clarification on software expenditures.