When does Cool Binz recognize Right-of-Use (ROU) assets related to a lease?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company recognizes lease liabilities to make lease payments and right-of-use (ROU) assets at lease inception, as follows:
- 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 commencement date of the lease. This is defined as the date the underlying asset becomes available for use.
The ROU assets are measured at cost, which includes the amount of lease liabilities recognized, any initial direct costs incurred, and lease payments made at or before the commencement date, minus any lease incentives received. These assets are then depreciated on a straight-line basis over the shorter of the lease term or the estimated useful lives of the assets.
For a Cool Binz franchisee, this means that the value of assets like leased equipment or property is recorded on the balance sheet as an asset from the moment it's available for use. The cost of this asset includes not only the lease payments but also any upfront costs. The franchisee will then depreciate this asset over its useful life or the lease term, whichever is shorter, impacting their profitability and tax obligations.