What method does Kitchen Solvers use to compute depreciation for financial reporting purposes?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
property, plant and equipment sold or otherwise disposed of are removed from the accounts and any gain or loss is reported as current year's revenue or expense.
Depreciation is computed on the straight-line method for financial reportin
Source: Item 21 — Financial Statements (FDD pages 48–49)
What This Means (2025 FDD)
According to Kitchen Solvers's 2025 Franchise Disclosure Document, the company uses the straight-line method to calculate depreciation for financial reporting. This method spreads the cost of an asset evenly over its estimated useful life, which for Kitchen Solvers ranges from 5 to 40 years.
For a prospective Kitchen Solvers franchisee, this means that the depreciation expense recognized each year for assets like equipment and leasehold improvements will be the same, making it predictable and straightforward. The FDD also indicates the depreciation expense for 2024 was $10,880, for 2023 it was $6,555, and for 2022 it was $1,585.
The choice of depreciation method can impact a company's reported profits, and the straight-line method is often favored for its simplicity and ease of understanding. Additionally, Kitchen Solvers capitalizes additions and betterments to property, plant, and equipment with a unit acquisition cost of $5,000 or more, indicating a consistent approach to managing and reporting its assets.