What is the estimated service life for furniture and equipment used for consolidated financial reporting purposes at Carbones Pizzeria?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment are stated at cost less accumulated depreciation and amortization and are depreciated or amortized using the straight-line method. Property and equipment is comprised of furniture and equipment, and vehicles which will be depreciated over five to seven years and leasehold improvements over the shorter of the lease term or the life of the asset.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to the 2025 FDD, Carbones Pizzeria uses an estimated service life of five to seven years for furniture and equipment when creating consolidated financial reports. This means that for accounting purposes, the cost of these assets will be spread out and recognized as an expense (depreciated) over this period.
For a Carbones Pizzeria franchisee, this depreciation schedule affects the business's financial statements and tax obligations. The straight-line depreciation method is used for financial reporting, while accelerated methods are used for income tax purposes. This can create differences between the income reported for financial statement purposes and the income reported for tax purposes.
Furthermore, Carbones Pizzeria amortizes leasehold improvements over the shorter of the lease term or the life of the asset. This is a common accounting practice, as leasehold improvements lose value when a lease expires and the tenant no longer has the right to use the improvements. Franchisees should understand these depreciation and amortization policies, as they impact the reported profitability of their Carbones Pizzeria location.