According to Itan's accounting policies, what is the treatment of property and equipment?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
Property and equipment - Property and equipment are carried at cost. Depreciation is computed using the straight-line method of depreciation over the assets estimated useful lives of five years. Maintenance and repairs are charged to the expense as incurred; major renewals and betterments are capitalized. When items of property and equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss is included in income.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the company carries property and equipment at cost. Depreciation is calculated using the straight-line method over an estimated useful life of five years for the assets.
Routine maintenance and repairs are expensed as they are incurred. However, major renewals and improvements that extend the life or value of the asset are capitalized, meaning they are added to the asset's cost and depreciated over their useful life.
When property and equipment are sold or retired, Itan removes the original cost and any accumulated depreciation from its accounts. Any resulting gain or loss from the sale or retirement is then included in Itan's income statement for that period.