What method does Brightstar Care use to compute depreciation for its property and equipment?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
ten years. Contract liabilities were immaterial as of December 29, 2024 and December 31, 2023.
Property and Equipment, Net
Property and equipment is recorded at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the equipment, three to seven years, or the life of the lease.
Notes to Consolidated Financial Statements
For property and equipment that is sold or retired, its cost and accumulated depreciation are removed from the consolidated balance sheets during the period of the disposition and any gain or loss on disposition is credited or charged to operations. Repair and maintenance costs are charged to expense as incurred.
The Company evaluates its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 117)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, the company records property and equipment at historical cost, less accumulated depreciation. Brightstar Care computes depreciation using the straight-line method over the estimated useful lives of the equipment, which range from three to seven years, or the life of the lease, if shorter.
For a prospective Brightstar Care franchisee, this means that the cost of equipment purchased for the business will be depreciated evenly over its useful life. The straight-line method is a common and simple way to allocate the cost of an asset over the period it is used to generate revenue. This impacts the franchisee's financial statements by reducing the reported value of assets over time and recognizing depreciation expense on the income statement.
Additionally, the FDD states that when property and equipment are sold or retired, Brightstar Care removes the cost and accumulated depreciation from its consolidated balance sheets during the period of disposition. Any gain or loss on the disposition is then credited or charged to operations. Repair and maintenance costs are expensed as they are incurred. Brightstar Care also evaluates its property and equipment for impairment when events suggest the carrying amount may not be recoverable, but no such impairments were identified in 2023 or 2024.