What depreciation method does Exit use for equipment and software?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Property, plant, and equipment are stated at cost. Significant additions or improvements extending asset lives are capitalized; normal maintenance and repairs are charged to expense as incurred. Upon retirement or other disposition of fixed assets, applicable cost and accumulated depreciation or amortization are removed from the accounts. Any gains or losses are included in the determination of the results of operations. Depreciation of furniture and fixtures is determined using the straight-line method over the estimated useful lives of the assets.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the company uses the straight-line method to depreciate furniture and fixtures over their estimated useful lives. This means the cost of the asset is evenly distributed over its lifespan, providing a consistent depreciation expense each year. This method is commonly used because of its simplicity and predictability.
For Exit franchisees, understanding the depreciation method is important for financial planning and tax purposes. The straight-line method allows for easy calculation of depreciation expenses, which can be deducted from taxable income, potentially lowering the overall tax burden. Franchisees should maintain accurate records of all furniture and fixture purchases to properly calculate and claim these deductions.
While the document specifies the depreciation method for furniture and fixtures, it does not explicitly state the depreciation method used for software or other equipment. It is important for prospective franchisees to clarify with Exit the specific depreciation methods used for all types of assets, including software, to ensure accurate financial reporting and tax compliance. Knowing the estimated useful lives of different asset categories is also crucial for forecasting and budgeting.