What costs are included in the measurement of Cool Binz's Right-of-Use (ROU) assets?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
- ROU Assets The Company recognizes ROU assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). ROU assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of ROU assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. ROU assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, the company recognizes Right-of-Use (ROU) assets at the lease commencement date. The cost of these ROU assets includes several components.
Specifically, the cost is comprised of the amount of lease liabilities recognized, initial direct costs incurred by Cool Binz, and any lease payments made at or before the commencement date. From this total, any lease incentives received are subtracted.
Cool Binz depreciates ROU assets on a straight-line basis over the shorter of the lease term or the estimated useful lives of the assets. This means that the expense is spread evenly over the asset's useful life or the lease duration, whichever is shorter. This approach is a standard accounting practice for depreciating assets.