How does Craters & Freighters amortize its software development costs?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
d to begin January 2026.
Note 4: Software Development
Software development assets are carried at historical cost less accumulated amortization and any recognized impairment loss. Software development is amortized on a straight-line basis over three years. Amortization expense for the years ended December 31, 2024 and 2023 totaled $116,969 and $101,989, respectively.
Summary of software development as of December 31:
| As of December 31, | 2024 | 2023 |
|---|---|---|
| Software Development Costs Less: Accumulated Amortization | $ 631,405 $ | 471,116 |
| (434,154) | (317, |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, software development assets are recorded at historical cost, reduced by accumulated amortization and any recognized impairment loss. Craters & Freighters amortizes these software development costs using the straight-line method over a period of three years.
For the year ending December 31, 2024, the amortization expense totaled $116,969, while for the year ending December 31, 2023, it was $101,989. As of December 31, 2024, the software development costs were $631,405, with accumulated amortization of $434,154, resulting in a net value of $197,251. As of December 31, 2023, the software development costs were $471,116, with accumulated amortization of $317,185, resulting in a net value of $153,931.
This means that Craters & Freighters spreads the cost of its software development evenly over three years, which is a common accounting practice. For a potential franchisee, this indicates that Craters & Freighters is investing in technology and systematically accounting for it. The amortization expense reflects the annual cost allocated to the use of the software, impacting the company's net income. The net value of software development represents the remaining unamortized cost on the balance sheet, which is an asset to the company.