Over what period 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
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 49)
What This Means (2025 FDD)
According to the 2025 FDD, Craters & Freighters amortizes its software development costs using a straight-line method over a period of three years. This means that the cost of the software is evenly spread out as an expense over those three years.
For a prospective franchisee, this detail is relevant in understanding how Craters & Freighters accounts for its software assets. Software development costs are recorded at historical cost, reduced by accumulated amortization and any impairment loss. Amortization reflects the gradual decline in the value of the software as it is used over time.
The FDD also provides specific amortization expenses for previous years. For example, the amortization expense totaled $116,969 for the year ended December 31, 2024, and $101,989 for the year ended December 31, 2023. These figures give insight into the scale of Craters & Freighters' investment in software and the associated expenses.
Furthermore, the summary of software development as of December 31, 2024, shows software development costs of $631,405 and accumulated amortization of $434,154, resulting in a net value of $197,251. This information helps potential franchisees assess the net value of the software assets and understand how amortization impacts the company's financial statements.