For Expense Reduction Analysts, over what period is Internal-Use Software amortized?
Expense_Reduction_Analysts Franchise · 2025 FDDAnswer from 2025 FDD Document
Software Development Costs
The Company accounts for capitalized software costs in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 350-40 Internal-Use Software. Certain costs incurred only during the application development stage such as coding, configuration, and customization are required to be capitalized. Alternatively, costs during the preliminary project and post-implementation stages, such as planning and training, are expensed. Amortization of capitalized software development costs begins when the software is ready for its intended use. Software development costs are amortized using the straight-line method with useful lives of 10 years, which represents the estimated economic life of the software.
Intangibles
Source: Item 23 — RECEIPTS (FDD pages 58–215)
What This Means (2025 FDD)
According to Expense Reduction Analysts's 2025 Franchise Disclosure Document, Internal-Use Software is amortized using the straight-line method over an estimated useful life of 10 years. This amortization begins when the software is ready for its intended use.
For a prospective Expense Reduction Analysts franchisee, this means that any capitalized software development costs will be systematically expensed over a 10-year period. Capitalized costs include those incurred during the application development stage, such as coding, configuration, and customization. Costs from preliminary project and post-implementation stages, like planning and training, are expensed immediately.
The FDD also notes that for the years ended December 31, 2024 and 2023, software development costs of $46,350 and $35,430 were capitalized and included in Internal-Use Software on the balance sheets, respectively. Depreciation expenses of $15,982 and $6,832 were charged to operations in the years ending December 31, 2024 and 2023, respectively. This provides a concrete example of how Expense Reduction Analysts accounts for these software costs and the associated amortization expenses.