How is Property and Equipment stated on Bombs Away's financial statements?

According to Bombs Away's 2024 Franchise Disclosure Document, Property and Equipment is stated at cost. Generally Accepted Accounting Principles (GAAP) require that property and equipment be depreciated using the straight-line method. However, Bombs Away uses accelerated depreciation methods for its tax return.

This deviation from GAAP means that the depreciation reflected in Bombs Away's financial statements is based on accelerated methods used for tax purposes rather than the straight-line method typically required by GAAP. The FDD notes that the effects of these departures from accounting principles generally accepted in the United States of America on financial position, results of operations, and cash flows have not been determined.

For a prospective Bombs Away franchisee, this means that the depreciation expense shown on the financial statements may be different from what would be expected under standard GAAP accounting. It's important to understand that while this approach may be beneficial for tax purposes, it could present a different picture of the company's financial performance compared to using the straight-line method. A prospective franchisee should consult with a financial advisor to understand the implications of this accounting practice.