What was the depreciation expense for Gold Star for the year ended December 31, 2023 (restated)?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
| Years Ended December 31, | |||
|---|---|---|---|
| 2024 2023 | (Restated) | ||
| Cash Flows From Operating Activities | |||
| Net Income | $ 2,498,270 $ 1,595,317 | $ 1,936,301 | |
| Reconciliation of Net Income with | |||
| Cash Flows From Operations | |||
| Depreciation | 1,249,072 930,216 | 807,295 | |
| Amortization | 63,323 | 70,168 69,297 | |
| Amortization on Loan Cost | 1 3,492 4 1,695 | 1 2,973 | |
| Loss on Disposal of Property and Equipment | - 4 4,694 | 5,367 | |
| Gain on Early Termination of Lease | - (26,298) | - | |
| Changes In | |||
| Accounts Receivable, Net | 206,833 292,502 | 524,429 | |
| Other Receivables | (589) 229,976 | (67,494) | |
| Inventory | 4 83,139 (354,258) | (479,542) | |
| Prepaid Expenses | 272,464 227,946 | (269,624) | |
| Contract Assets | - 3 6,849 | 1 14,057 | |
| Deposits | 1 43,766 1 0,156 | (239,834) | |
| Right of Use Asset - Operating Leases | 9 75,114 8 81,258 | 6 10,647 | |
| Operating Lease Liabilities | (790,746) (765,735) | (517,628) | |
| Bank Overdraft | - (432,410) | 4 32,410 | |
| Accounts Payable Operating | (755,131) 1,041,601 | (409,194) | |
| Gift Card Liability | 6,158 2,909 | 6,744 | |
| Deferred Franchise Fees | (17,826) (26,558) | (14,609) | |
| Accrued Wages and Other Liabilities | 2 61,526 2 6,786 | (3,854) | |
| Accrued Expenses and Other Liabilities | (205,784) 4 0,485 | (125,691) | |
| Cash Provided by Operating Activities | 4 ,403,081 3,867,299 | 2,392,050 |
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the depreciation expense for the year ended December 31, 2023 (restated) was $807,295. This figure is part of the consolidated statement of cash flows, specifically within the reconciliation of net income with cash flows from operations. Depreciation is a non-cash expense that reflects the reduction in value of Gold Star's assets over time.
For a prospective franchisee, understanding depreciation is crucial as it impacts the overall financial health of Gold Star. While depreciation itself doesn't involve a direct cash outflow, it reduces the company's taxable income, which can result in lower tax liabilities. This restated figure indicates that Gold Star has adjusted its financials to accurately reflect its financial performance.
It's important to note that the 2023 financial statements were restated to correct an accrual made for 401(k) expenses. This restatement affected several line items in the statement of cash flows, including net income and other operational cash flow components. Franchisees should be aware of such restatements and understand the reasons behind them, as they can provide insights into the company's accounting practices and financial stability.
Depreciation, along with other non-cash items like amortization, are added back to net income when calculating cash flows from operations. This is because these expenses reduce net income without affecting the actual cash balance. Therefore, the depreciation expense of $807,295 plays a role in determining Gold Star's overall cash flow from operating activities, which was $2,392,050 for the year ended December 31, 2023 (restated).