What depreciation method does Itan use for 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 and calculates depreciation using the straight-line method. This depreciation is applied over an estimated useful life of five years for the assets.
For a prospective franchisee, this means that the cost of assets like tanning beds, salon furniture, and other equipment will be spread evenly over five years for accounting purposes. This impacts the franchisee's financial statements by reducing the reported profit each year by the depreciation amount.
The FDD also specifies that maintenance and repairs are expensed as incurred, while major renewals and betterments are capitalized, meaning their costs are added to the asset's value and depreciated over time. When property and equipment are sold or retired, Itan removes the related cost and accumulated depreciation from its accounts, and any gain or loss is included in income.