How does Chem Dry amortize intangible assets?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
Intangible assets subject to amortization are stated at cost and are amortized using the straight-line method over the estimated useful lives of the assets. Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable.
Amortization expense for intangible assets totaled $4,380, $5,169, and $5,446 for the years ended December 31, 2023, 2022, and 2021, respectively.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, intangible assets subject to amortization are recorded at cost and amortized using the straight-line method over their estimated useful lives. These assets are also reviewed for potential impairment whenever events or circumstances suggest that their carrying amounts may not be recoverable.
In 2023, 2022, and 2021, Chem Dry's amortization expense for intangible assets totaled $4,380,000, $5,169,000, and $5,446,000, respectively. This indicates the expense recognized each year as the value of these assets is used up.
The straight-line method means that the cost of the intangible asset is evenly distributed over its useful life, resulting in a consistent amortization expense each period, unless an impairment is recognized. This approach provides a predictable and straightforward way to account for the decline in value of intangible assets like patents, trademarks, and franchise agreements. If Chem Dry determines that the value of an intangible asset has been significantly and permanently reduced, they will recognize an impairment loss to reflect the reduced value on their financial statements.