What was the total cost of property and equipment for Chem Dry in 2022?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
| $ 2,435 | $ 3,563 |
The activity in the allowance for credit losses is as follows:
| 2023 | |
|---|---|
| Balance at beginning of period | $ 1,746 |
| Additions charged to expense | 292 |
| Deductions/write-offs | (923) |
| Balance at end of period | $ 1,115 |
December 31, 2023, 2022, and 2021 (000s omitted)
Note 8 - Property and Equipment
Property and equipment at December 31, 2023, 2022, and 2021 are summarized as follows:
| 2023 | 2022 | 2021 | Depreciable Life - Years |
|---|
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the total cost of property and equipment in 2022 was $3,036. This figure represents the aggregate investment in various assets that Chem Dry uses in its operations. These assets include machinery and equipment, vehicles, furniture and fixtures, office and computer equipment, leasehold improvements, and construction in progress.
For a prospective Chem Dry franchisee, understanding the composition and depreciable life of these assets is crucial for financial planning. For example, machinery and equipment, which had a total cost of $762 in 2022, has a depreciable life of 2-10 years, while vehicles ($102 in 2022) depreciate over 5 years. Office and computer equipment ($1,253 in 2022) and furniture and fixtures ($126 in 2022) both have a depreciable life of 3-5 years. Leasehold improvements ($431 in 2022) depreciate over 1-7 years.
The depreciation of these assets affects the franchisee's taxable income, and the depreciable life determines how quickly these assets can be written off. Construction in progress ($362 in 2022) is also included in the total cost, but it does not have a specified depreciable life until the construction is completed and the asset is placed in service. The net property and equipment, which accounts for accumulated depreciation, was $1,701 in 2022, reflecting the book value of these assets after accounting for depreciation.