What method does Clear Pest Pros use to amortize intangible assets?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
h is included within operating expenses on the consolidated statement of operations.
Intangible Assets
Intangible assets subject to amortization are stated at cost and are amortized using the straightline method over the estimated useful lives of the assets. Intangible assets that are subject to
Notes to Consolidated Financial Statements (dollars in thousands)
amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable.
During 2022, the Company determined that, based on estimated future cash flows, the carrying amount of the Delta trade name and franchise agreements exceeded their fair value;
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 67)
What This Means (2025 FDD)
According to Clear Pest Pros' 2025 Franchise Disclosure Document, intangible assets subject to amortization are amortized using the straight-line method over the estimated useful lives of the assets. This means that the cost of the intangible assets is evenly spread out over their useful life, with the same amount of expense recognized each period.
For a prospective Clear Pest Pros franchisee, this is relevant because it affects how the franchise's financial statements will look. Amortization expense for intangible assets totaled $4,380 in 2024 and 2023, and $5,169 in 2022. These figures are included within operating expenses on the consolidated statement of operations, ultimately impacting the net income.
Goodwill, another type of intangible asset, is not amortized but is assessed at least annually for impairment. If the value of goodwill decreases, Clear Pest Pros would recognize an impairment loss, as they did in 2023 and 2024 with losses of $45,537 and $10,519 respectively. These impairment losses also impact the company's profitability. Understanding these accounting practices is crucial for franchisees to interpret Clear Pest Pros' financial statements and assess the financial health of the company.