What does Bor Restoration's ROU assets also include?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company determines if an arrangement is or contains a lease at inception. Leases are included in right-of-use (ROU) assets and lease liabilities on the balance sheets. ROU assets and lease liabilities reflect the present value of the future minimum lease payments over the lease term, and ROU assets also include prepaid or accrued rent. Operating lease expense is recognized on a straight-line basis over the lease term. The Company does not report ROU assets and lease liabilities for its short-term leases (leases with a term of 12 months or less). Instead, the lease payments of those leases are reported as lease expense on a straight-line basis over the lease term.
Source: Item 23 — Receipts (FDD pages 40–202)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, the company includes leases in right-of-use (ROU) assets and lease liabilities on their balance sheets. These ROU assets and lease liabilities are a reflection of the present value of the future minimum lease payments that are expected over the lease term.
In addition to the present value of lease payments, Bor Restoration's ROU assets also include prepaid or accrued rent. This means that if Bor Restoration has paid rent in advance or has accrued rent expenses that have not yet been paid, these amounts are also factored into the value of the ROU assets reported on the balance sheets.
Bor Restoration recognizes operating lease expenses on a straight-line basis over the lease term. However, the company does not report ROU assets and lease liabilities for short-term leases, which are defined as leases with a term of 12 months or less. Instead, the lease payments for these short-term leases are reported as lease expenses on a straight-line basis over the lease term.