What happens 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, the company adheres to specific accounting practices regarding the sale or retirement of property and equipment. When such items are sold or retired, Itan removes the related cost and accumulated depreciation from its accounts. Any resulting gain or loss from this transaction is then included in Itan's income.
This accounting practice is standard and ensures that Itan's financial statements accurately reflect the disposal of assets and the impact on the company's profitability. For a prospective franchisee, understanding these accounting procedures is important for interpreting Itan's financial performance and assessing the overall financial health of the company.
It is important to note that this information pertains to Itan's accounting practices and not necessarily those of individual franchisees. Franchisees should consult with their own financial advisors to understand the accounting implications of asset sales or retirements within their own businesses.