What is the estimated useful life of Itan's property and equipment for depreciation purposes?
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 calculates depreciation for property and equipment using the straight-line method over an estimated useful life of five years. This means that the initial cost of an asset will be evenly expensed over five years.
For a prospective Itan franchisee, this is relevant when considering the accounting and tax implications of purchasing equipment and property for their salon. The five-year depreciation period will affect the franchisee's annual expense deductions and taxable income.
It's also important to note 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 its remaining useful life. 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.