How does Crave Cookies calculate depreciation and amortization expenses for property and equipment?

According to Crave Cookies' 2025 Franchise Disclosure Document, property and equipment acquisitions are recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization are charged to expense on a straight-line basis over the estimated useful life of each asset. The estimated useful lives for equipment is between three to five years.

For a prospective Crave Cookies franchisee, this means that when the franchisor acquires property and equipment, the initial cost is recorded. Over the asset's useful life (3-5 years for equipment), a portion of the cost is recognized as an expense each year. This is done using the straight-line method, which means an equal amount of depreciation is recorded each year until the asset is fully depreciated.

This accounting practice is fairly standard. The straight-line method is commonly used due to its simplicity and ease of calculation. The depreciation expense impacts the net income of Crave Cookies, and the accumulated depreciation reduces the book value of the assets on the balance sheet. This approach provides a systematic way to allocate the cost of assets over their useful lives, reflecting their wear and tear or obsolescence.