How does Checkersrallys calculate depreciation for its property and equipment?

According to Checkersrallys's 2025 Franchise Disclosure Document, property and equipment are recorded at fair value in connection with the Merger for the Predecessor periods and in connection with the Out-of-Court Restructuring for the Successor period and are otherwise recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.

For Checkersrallys, this means that the cost of the asset is evenly spread out over its estimated useful life. For example, if a piece of equipment costs $10,000 and has an estimated useful life of 5 years, the annual depreciation expense would be $2,000. This method provides a consistent and predictable expense each year, simplifying financial planning. Leasehold improvements are depreciated over the lesser of their estimated useful lives (generally 10 years) or the remaining lease term.

Maintenance and repairs are expensed as incurred, while expenditures for betterments are capitalized. The estimated useful lives for different asset categories vary, with leasehold and land improvements ranging from 1 to 10 years, buildings from 5 to 30 years, and equipment, furniture, and fixtures from 3 to 10 years. This impacts the annual depreciation expense for each type of asset, affecting the overall profitability reported in Checkersrallys's financial statements.