How does Clear Pest Pros measure Right-of-Use (ROU) assets at the commencement date of the lease?

According to Clear Pest Pros's 2025 Franchise Disclosure Document, the company recognizes Right-of-Use (ROU) assets at the commencement date of the lease, which is the date the underlying asset becomes available for use. These ROU assets are measured at cost, after deducting any accumulated depreciation and impairment losses, and are adjusted for any remeasurement of lease liabilities.

The cost of the ROU assets includes the amount of lease liabilities recognized, any initial direct costs incurred, and lease payments made at or before the commencement date, less any lease incentives received. This comprehensive approach ensures that all relevant expenses and benefits associated with the lease are factored into the asset's valuation.

Clear Pest Pros depreciates ROU assets on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. This depreciation method evenly distributes the cost of the asset over its useful life or the lease term, providing a consistent expense recognition. For a prospective franchisee, understanding how ROU assets are measured and depreciated is crucial for assessing the financial impact of lease agreements on their business.