What was the depreciation expense for Craters & Freighters in 2022?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
| As of December 31, 2023 | Cost | Accumulated Depreciation | | Net Book Value | |----------------------------------------------------------------------------------|---------------------------------------------|---------------------------------------------|----|------------------------| | Office Equipment | $ 80,613 | $ 80,613 | $ | - | | Furniture and Fixtures | 19,863 | 19,863 | | - | | Leasehold Improvements | 11,415 | 11,415 | | - | | Vehicles | 202,688 | 21,737 | | 180,951 | | | $ 314,579 | $ 133,628 | $ | 180,951 | | As of December 31, 2022 | Cost | Accumulated Depreciation | | Net Book Value | | Office Equipment | $ 80,613 | $ 80,613 | $ | - | | Furniture and Fixtures | 19,863 | 19,863 | | - | | Leasehold Improvements | 11,415 | 11,415 | | - | | Vehicles | 215,039 | 113,372 | | 101,667 | | | $ 326,930 | $ 225,263 | $ | 101,667 | Depreciation expense for the years ended December 31, 2023 and 2022 was $26,132 and $21,993, respectively.
Note 4: Software Development
Software development assets are carried at historical cost less accumulated amortization and any recognized impairment loss. Software development is amortize
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, the depreciation expense for the years ending December 31, 2023, and 2022 was $26,132 and $21,993, respectively. This indicates that Craters & Freighters' depreciation expense increased from 2022 to 2023. Depreciation is the expensing of a company's assets over time as they wear out.
For a prospective franchisee, understanding depreciation expense is crucial as it reflects the wear and tear of assets used in the business. Higher depreciation expenses can indicate significant investments in equipment or assets that are aging. This can impact the franchisee's future capital expenditure planning, as they may need to replace or upgrade equipment sooner than anticipated.
In addition to depreciation expense, Craters & Freighters also incurred amortization expenses related to software development. The amortization expense for the years ended December 31, 2023 and 2022 totaled $101,989 and $99,763, respectively. Amortization is similar to depreciation, but it applies to intangible assets like software. This suggests that Craters & Freighters invests in and utilizes software in its operations, which could be a factor for franchisees to consider in terms of technology and operational efficiency.