What was the total ROU Asset, net, for Crawlspace Medic in 2023?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
f the individual lease terms.
Amounts reported on the balance sheet as of December 31, 2023 and 2022 were as follows:
| Operating Leases: | 2023 | 2022 | |
|---|---|---|---|
| ROU asset | $ 35,224 | $ 35,224 | |
| ROU amortization | (14,090) | (7,045) | |
| Total ROU Asset, Net | $ 21,135 | 28,179 | |
| Lease liability: | |||
| Current portion of lease liability | $ 7,054 | 6, |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2024 FDD)
According to Crawlspace Medic's 2024 Franchise Disclosure Document, the total ROU (Right-of-Use) Asset, net, for the company in 2023 was $21,135. This figure represents the value of the company's right to use an asset, such as property or equipment, after accounting for amortization (the reduction of its value over time). The ROU asset before amortization was $35,224, with accumulated amortization of $14,090 deducted to arrive at the net value.
For a prospective Crawlspace Medic franchisee, understanding the ROU asset and its associated lease liabilities is crucial. Leases are a common business expense, and the ROU asset reflects the value of the company's rights under those leases. The amortization expense represents the cost of using the asset over its lease term. Monitoring these figures can help a franchisee assess the financial obligations and performance related to leased assets.
The FDD also shows that in 2023, the current portion of the lease liability was $7,054, and the non-current portion was $12,914, resulting in a total lease liability of $19,968. These liabilities represent the company's obligation to make future lease payments. Franchisees should carefully review all lease agreements and understand their obligations, as these liabilities can significantly impact their financial performance.
It's important to note that the accounting standards (FASB ASC 842) require companies to recognize ROU assets and lease liabilities on their balance sheets, providing a more transparent view of their leasing activities. Crawlspace Medic adopted this standard on January 1, 2022, which may have impacted the comparability of financial statements before and after that date. Prospective franchisees should consult with a financial advisor to fully understand the implications of these accounting standards and how they affect Crawlspace Medic's financial position.