What was the accumulated amortization expense for Churchs Chicken?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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| Land | $ | 74,741 | $ | 76,754 |
|---|---|---|---|---|
| Buildings and improvements | 40,012 | 36,513 | ||
| Equipment | 25,175 | 21,716 | ||
| Construction-in-progress | 1,402 141,330 | 2,198 137,181 | ||
| Less accumulated depreciation | (21,288) | (11,458) | ||
| $ | 120,042 | $ | 125,723 | |
| December 31, 2023 | December 25, 2022 | |||
| -------------------------------- | ---------------------- | ---------------------- | -- | |
| Trademarks | $ 237,900 | $ 237,900 | ||
| Amortizable intangible assets: | ||||
| Franchise agreements | 43,100 | 43,100 | ||
| Deferred lease assets | 21,044 | 21,159 | ||
| Development agreements | 13,100 315,144 | 13,100 315,259 | ||
| Less accumulated amortization: | ||||
| Franchise agreements | (8,897) | (4,909) | ||
| Deferred lease assets | (9,342) | (5,503) | ||
| Development agreements | (2,777) | (1,587) | ||
| Total accumulated amortization | (21,016) $ 294,128 | (11,999) $ |
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 35–43)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, the accumulated amortization expense is detailed for specific intangible assets. As of December 31, 2023, the accumulated amortization for franchise agreements was $(8,897), for deferred lease assets it was $(9,342), and for development agreements, it was $(2,777). The total accumulated amortization across these categories was $(21,016). For the period ending December 25, 2022, the accumulated amortization for franchise agreements was $(4,909), for deferred lease assets $(5,503), and for development agreements $(1,587), totaling $(11,999).
These figures represent the reduction in value of Churchs Chicken's intangible assets over time, which is a standard accounting practice to reflect the consumption of these assets' economic benefits. For a prospective franchisee, understanding these amortization expenses can provide insight into how Churchs Chicken values and accounts for its intangible assets like franchise agreements and lease rights. It also shows how these values change year to year.
It's important to note that accumulated amortization is a contra-asset account, meaning it reduces the net book value of the related assets on Churchs Chicken's balance sheet. Franchisees should be aware that while these are accounting entries and do not directly impact cash flow, they do reflect the franchisor's financial management and asset valuation strategies. Reviewing these figures in the context of the overall financial statements can offer a more complete picture of Churchs Chicken's financial health.