How are finance lease assets amortized by Corcoran?

According to Corcoran's 2025 Franchise Disclosure Document, finance lease assets are amortized using a straight-line method. This means the cost of the asset is evenly distributed over its useful life or the lease term, whichever is shorter. The interest component of the finance lease is treated as interest expense and is recognized using the effective interest method throughout the lease term.

For a prospective Corcoran franchisee, this means that if you enter into a finance lease for assets used in your business, such as equipment or vehicles, the cost of those assets will be systematically expensed over the lease period. The straight-line method provides a consistent and predictable expense each period, simplifying financial planning. However, it's important to note that the amortization period is limited to the shorter of the asset's useful life or the lease term, which could impact the annual expense amount.

Furthermore, the FDD indicates that as of December 31, 2024, Corcoran's finance lease assets were recorded net of accumulated amortization of $51 million and $52 million as of December 31, 2023. This suggests that finance leases are a significant part of Corcoran's overall financial structure. Understanding the terms and amortization schedule of any finance leases will be crucial for franchisees to accurately manage their financial statements and tax obligations.

In 2024, the finance lease assets were $21 million, and in 2023, they were $29 million. The weighted average remaining lease term for finance leases was 2.6 years in 2024 and 3.0 years in 2023. This information can help a franchisee understand the typical duration of Corcoran's finance leases and plan accordingly for asset replacement or lease renewal.