What method does Deka Lash use to amortize internally developed software?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
s ending December 31, 2023, 2022, and 2021, was $17,948, $13,439, and $19,608, respectively.
4. INTANGIBLE ASSETS
PROPERTY AND EQUIPMENT
Total property and equipment, net
| (A) 1 20 M (A) (A) (A) (A) (A) (A) (A) (A) (A) (A) | 12 | /31/2023 | 1 | 2/31/2022 | 12 | 31/2021 | |-------------------------------------------------
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, Deka Lash began amortizing its internally developed software in 2022, upon completion of the applications. The company uses the straight-line method over an estimated useful life of three years.
The amortization expense for internally developed software was $18,000 for the year ended December 31, 2023, $13,556 for the year ended December 31, 2022, and $0 for the year ended December 31, 2021.
For a prospective franchisee, this information is relevant because it provides insight into how Deka Lash accounts for its internally developed software. The straight-line method evenly distributes the cost of the software over its useful life, which can impact the company's financial statements. The amortization expenses listed show the actual amounts recognized in previous years, offering a view into the financial impact of this software.