Over what period does Clear Pest Pros depreciate the cost of leasehold improvements?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment are recorded at cost. The straight-line method is used for computing depreciation. Assets are depreciated over their estimated useful lives. The cost of leasehold improvements is depreciated over the lesser of the length of the related leases or the estimated useful lives of the assets.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 67)
What This Means (2025 FDD)
According to Clear Pest Pros' 2025 Franchise Disclosure Document, the cost of leasehold improvements is depreciated using the straight-line method over the shorter of either the length of the related lease or the estimated useful life of the assets.
This means that a Clear Pest Pros franchisee will need to assess the lease term and the estimated useful life of any leasehold improvements to determine the depreciation period. For example, if a lease is for 3 years, and the useful life of the improvements is estimated to be 5 years, the depreciation will occur over the 3-year lease term. Conversely, if the lease is for 7 years, but the useful life is estimated to be 5 years, the depreciation will occur over the 5-year useful life.
In 2024, 2023, and 2022, Clear Pest Pros reported leasehold improvements with depreciable lives ranging from 1 to 5 years. For a Clear Pest Pros franchisee, this depreciation method affects the business's financial statements and tax obligations, as depreciation is a deductible expense. Franchisees should consult with a financial professional to understand the implications for their specific circumstances.