What depreciation method does Christian Brothers Automotive use for its property and equipment?
Christian_Brothers_Automotive Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment are recorded at cost. Depreciation is computed at rates considered sufficient to amortize the costs of the assets over their estimated useful lives using the straight-line method. Expenditures for replacements and improvements are capitalized, and routine repairs and maintenance are charged to expense as incurred. Disposals are removed at cost less accumulated depreciation, and any resulting gain or loss is reflected in operations.
Depreciation and amortization are based on the following estimated useful lives:
Office equipment 3 - 5 years Furniture and fixtures 5 years Vehicles 5 years Buildings 15 - 38 years
Leasehold improvements are depreciated over the shorter of lease term or estimated useful life.
Source: Item 23 — RECEIPTS (FDD pages 76–372)
What This Means (2025 FDD)
According to Christian Brothers Automotive's 2025 Franchise Disclosure Document, the company uses the straight-line method to depreciate its property and equipment. This method is applied at rates considered sufficient to amortize the costs of the assets over their estimated useful lives.
For franchisees, this means that the cost of assets like office equipment, furniture, fixtures, vehicles, and buildings will be systematically expensed over their respective useful lives. The estimated useful lives are: office equipment (3-5 years), furniture and fixtures (5 years), vehicles (5 years), and buildings (15-38 years). Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life.
Expenditures for replacements and improvements are capitalized, meaning they are added to the asset's cost and depreciated over time. Routine repairs and maintenance are expensed as incurred. When assets are retired or disposed of, their cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the operations. This approach provides a consistent and predictable way to account for the depreciation of assets, which can help in financial planning and analysis.