How does Burger King recognize amortization expense for capitalized software?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
We record capitalized software at historical cost less accumulated amortization, which is recognized using the straight-line method. Amortization expense is based on the estimated useful life of the software, which is primarily up to five years, once the asset is available for its intended use.
Implementation costs incurred in connection with Cloud Computing Arrangements ("CCA") are capitalized consistently with costs capitalized for internal-use software. Capitalized CCA implementation costs are included in "Other assets" in the consolidated balance sheets and are amortized over the term of the related hosting agreement, including renewal periods that are reasonably certain to be exercised. Amortization expense of CCA implementation costs is classified as "General and administrative expenses" in the consolidated statements of operations.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 109–124)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, capitalized software is recorded at historical cost less accumulated amortization. Burger King recognizes amortization expense using the straight-line method. The amortization expense is based on the estimated useful life of the software, which is primarily up to five years, once the asset is available for its intended use.
For Cloud Computing Arrangements (CCA), implementation costs are capitalized consistently with costs capitalized for internal-use software. These capitalized CCA implementation costs are included in "Other assets" on the consolidated balance sheets. The costs are amortized over the term of the related hosting agreement, including renewal periods that are reasonably certain to be exercised.
The amortization expense of CCA implementation costs is classified as "General and administrative expenses" in the consolidated statements of operations. This means that the expense is included within the general overhead costs of running the Burger King business, rather than being directly attributed to specific revenue-generating activities.