What was the reported ROU asset value for Dog Haus in 2024?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
ng the discount rate used to measure the ROU asset and lease liability, the Company uses the rate implicit in the lease, or if not readily available, the Company uses a risk-free rate based on U.S. Treasury notes or bond rates for a similar term.
Notes to Financial Statements December 31, 2024, 2023 and 2022
ROU asset is assessed for impairment in accordance with the Company's long-lived asset policy. The Company reassesses lease classification and remeasures ROU asset and lease liability when a lease is modified, and that modification is not accounted for as a separate new lease or upon certain other events that require reassessment in accordance with Topic 842.The Company made significant assumptions and judgments in applying the requirements of Topic 842. In particular, the Company:
- Determined the discount rate used to measure the lease liability.
- Evaluated whether a contract contains a lease, by considering factors such as whether the Company obtained substantially all rights to control an identifiable underlying asset and whether the lessor has substantive substitution rights.
- Determined whether contracts contain embedded leases.
The Company entered into a lease agreement for the corporate office facility commencing December 1, 2021, and expiring March 1, 2025. As of and for the year ended December 31, 2024 and December 31, 2023, the current portion of the lease liability was $34,067 and $121,020. As of and for the year ended December 31, 2024, the discount rate for the lease was 3.75% and the remaining life is three months.
Source: Item 23 — RECEIPTS (FDD pages 87–328)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, the company recognizes a right-of-use (ROU) asset representing its right to use an underlying asset for the lease term, and a lease liability representing the obligation to make lease payments. These are recognized at the commencement date of a lease based on the net present value of lease payments over the lease term. The company primarily uses a risk-free rate based on U.S. Treasury notes or bond rates for a similar term to determine the discount rate.
As of December 31, 2024, the ROU asset related to the operating lease was valued at $27,556. The current portion of the lease liability was $34,067, with a discount rate of 3.75% and a remaining lease life of three months.
For a prospective Dog Haus franchisee, understanding the ROU asset and lease liability is crucial, especially if they plan to lease property for their franchise location. This valuation impacts the franchisee's balance sheet and financial obligations. The lease agreement for the corporate office facility commenced December 1, 2021, and expires March 1, 2025.