What happens to any gain or loss when items of property and equipment are sold or retired by Itan?
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, when items of property and equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts. Any resulting gain or loss is then included in the company's income.
For a prospective Itan franchisee, this accounting practice means that if you sell or retire any assets used in your Itan salon, such as tanning beds or spray booths, the difference between the asset's book value (original cost less accumulated depreciation) and the proceeds from the sale (if any) will impact the franchisee's reported income. A sale above book value results in a gain, increasing income, while a sale below book value or a retirement results in a loss, decreasing income.
This is a standard accounting procedure. It ensures that the financial statements accurately reflect the economic impact of asset disposals. Franchisees should maintain accurate records of the cost and depreciation of all property and equipment to properly account for these transactions.