How does Learningrx calculate the ROU asset?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
ing leasehold improvements as certain options to renew were not reasonably certain. Adoption of the standard required the Company to restate amounts as of October 1, 2021, resulting in an increase in operating lease ROU assets of $362,438 and an increase in operating lease liabilities of $362,438.
The company rents real estate from a related company. The lease is for month-to-month and has an option to renew annually, both parties have the ability and expectation to continue to renew. The entity has the ability to extend the lease to the maximum of 5 years, or as long as reasonably certain that
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, the company uses the incremental borrowing rate to calculate the Right-of-Use (ROU) asset. The ROU assets, as of September 30, 2024 and 2023, were valued at $218,958 and $220,053, respectively.
Learningrx rents real estate from a related company under a month-to-month lease agreement that includes an option to renew annually. Both parties involved have the ability and expectation to continue renewing the lease. The entity can extend the lease up to a maximum of 5 years, provided it is reasonably certain that the renewal option will be chosen.
For the years ending September 30, 2024 and 2023, the rent expense amounted to $60,000 and $80,000, respectively. The adoption of FASB Topic 842, Leases, on October 1, 2021, led to an increase in operating lease ROU assets and operating lease liabilities by $362,438 each. This adoption involved using the modified retrospective approach and electing practical expedients, including using hindsight to determine lease terms and useful lives of leasehold improvements.