What was the amount of Caring Transitions' accumulated depreciation in 2023?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
that we identified during the audit.
Clark, Schaefer, Hackett & Co.
Cincinnati, Ohio March 24, 2025
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Assets | |||
| Current assets: | |||
| Cash | $ 2,075,001 | 949,879 | 979,239 |
| Restricted cash | 239,784 | 170,591 | 115,694 |
| Accounts receivable | 706,468 | 532,863 | 389,795 |
| Other receivables | - | - | 6,463 |
| 3,021,253 | 1,653,333 | 1,491,191 | |
| Property and equipment: | |||
| Internal-use software costs | 1,277,414 | 982,694 | 682,334 |
| Computer equipment | 30,428 | 30,428 | 30,428 |
| Leasehold improvements | 40,610 | 40,610 | 40,610 |
| 1,348,452 | 1,053,732 | 753,372 | |
| Accumulated depreciation | (367,508) | (253,387) | (144,122) |
| 980,944 | 800,345 | 609,250 | |
| Other assets: | |||
| Franchise contract asset | 279,182 | 194,035 | 125,690 |
| Operating right-of-use asset | 485, |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, the accumulated depreciation for the company in 2023 was $253,387. This figure represents the total depreciation expense recognized against the company's assets up to the end of 2023. Accumulated depreciation is a contra-asset account that reduces the net book value of the company's assets, reflecting the wear and tear or obsolescence of those assets over time. The assets subject to depreciation include internal-use software costs, computer equipment, and leasehold improvements.
For a prospective Caring Transitions franchisee, understanding accumulated depreciation is important for assessing the financial health and asset management practices of the franchisor. A growing accumulated depreciation balance suggests that the company is aging its assets, which may require future capital expenditures to replace or upgrade them. However, it's also a normal part of doing business as assets wear down over time.
It is important to note that depreciation is a non-cash expense, meaning it does not involve an actual outflow of cash. Instead, it is an accounting method used to allocate the cost of an asset over its useful life. The depreciation method used by Caring Transitions is the straight-line method, which means that the cost of the asset is evenly distributed over its estimated useful life, which ranges from five to fifteen years. This method provides a consistent and predictable depreciation expense each year, making it easier to forecast future financial performance.
Franchisees should consider the accumulated depreciation in conjunction with other financial metrics to gain a comprehensive understanding of Caring Transitions' financial position. Comparing the accumulated depreciation to the total asset base can provide insights into the age and condition of the company's assets. Additionally, tracking the trend of accumulated depreciation over time can help identify any significant changes in the company's investment in and management of its assets.