As of December 31, 2023, what was the amount of deferred contract costs for Deka Lash?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition (Continued)
The Company's contract liabilities are comprised of unamortized initial franchise fees. As of December 31, 2023, deferred franchise fees consisted of the following:
Deferred franchise fees $ 6,400,116
Less: current maturities (1,159,901)
$ 5,240,215
As of December 31, the Company expects to recognize contract liabilities as revenue over the remaining term of the associated franchise agreements as follows:
| 2024 | 5 | 1,159,901 |
|---|---|---|
| 2025 | 1,159,901 | |
| 2026 | 1,149,251 | |
| 2027 | 1.023,497 | |
| 2028 | 642,072 | |
| Thereafter | 1,265,494 |
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, as of December 31, 2023, the company's deferred contract costs totaled $3,163,191. These costs are associated with obtaining franchise agreements and are capitalized on the balance sheets. Deka Lash recognizes these costs on a straight-line basis, aligning with the franchisee's right to use and benefit from the company's intellectual property. The current maturities, representing the portion of these costs expected to be recognized within one year, are deducted from the total deferred contract costs. The current maturities were valued at ($569,298).