How does Checkers depreciate leasehold improvements?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated over the lesser of their estimated useful lives (generally 10 years) or the remaining lease term.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, Checkers uses the straight-line method to depreciate leasehold improvements. This means the cost of the improvements is evenly spread over their useful life.
For Checkers, leasehold improvements are depreciated over the lesser of their estimated useful lives, which is generally 10 years, or the remaining lease term. This means that if a lease is shorter than 10 years, the improvements will be depreciated over the lease term instead.
This depreciation method affects Checkers' financial statements by gradually reducing the value of the leasehold improvements over time, reflecting their use and wear. It's a standard accounting practice that allows Checkers to expense the cost of these improvements in a consistent manner, aligning the expense with the benefit received over the asset's life.