According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the property and equipment category includes furniture, equipment, vehicles, and leasehold improvements. These assets are recorded at cost, with deductions for accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method. Furniture, equipment, and vehicles are depreciated over a period of five to seven years, while leasehold improvements are depreciated over the shorter of the lease term or the asset's life.

This accounting policy is important for prospective Carbones Pizzeria franchisees because it outlines how the tangible assets of the business are valued and depreciated for financial reporting purposes. Understanding the depreciation method and timelines can help franchisees project their expenses and understand the book value of their assets over time. This is a standard accounting practice, ensuring consistency and comparability in financial reporting.

Furthermore, Carbones Pizzeria periodically evaluates the net realizable value of long-lived assets, including property and equipment. This evaluation considers factors such as operating results, business plans, economic projections, and anticipated future cash flows. If the fair value of an asset is less than its carrying value, an impairment loss is recognized. This means that the value of the assets could be adjusted downward if their market value declines, which could impact the franchisee's balance sheet and overall financial performance.

For a potential Carbones Pizzeria franchisee, this information highlights the importance of maintaining accurate records of asset costs and understanding the depreciation schedule. It also underscores the need to monitor the market value of assets and be aware of potential impairments, which could affect the financial health of the franchise. Franchisees should consult with financial professionals to fully understand these accounting principles and their implications for their business.