For Deka Lash, how are asset additions over $1,000 recorded?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
scence and to lower of cost or market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Once established, the original cost of the inventory less the related allowance represents the new cost basis of such products. Reversal of the allowance is recognized only when the related inventory has been sold or scrapped.
Prepaid expenses and other current assets
Prepaid expenses and other current assets represent expenses paid prior to receipt of the related goods or services, including insurance, travel, and other miscellaneous costs.
Property and Equipment
Asset additions over $1,000 are recorded at cost on the date of purchase. Property and equipment are stated at cost less accumulated depreciation. Deprecation expense is computed using the straight-line method over the assets' estimated useful lives. Estimated useful lives are periodically reviewed, and where appropriate, changes are made pros
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, asset additions exceeding $1,000 are recorded at cost on the date of purchase. The document specifies that property and equipment are valued at cost, less accumulated depreciation. Depreciation expense is calculated using the straight-line method over the assets' estimated useful lives, which Deka Lash periodically reviews and adjusts as necessary. The company estimates these useful lives to range from five to seven years.
Costs associated with maintenance and repairs that do not enhance or extend the useful lives of the assets are expensed in the current period. This means that routine maintenance will be treated as an immediate expense, while significant improvements are capitalized as part of the asset's cost.
Deka Lash also reviews the carrying values of property and equipment for impairment when events or circumstances suggest that the carrying value of an asset may not be recoverable from its estimated future cash flows. If impairment is indicated, a loss is recognized to the extent that the carrying value exceeds the asset's fair value. The document notes that no impairment was recognized during the years ended December 31, 2023, 2022, or 2021.