What method does Learningrx use to compute depreciation and amortization of property and equipment?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
ectible balances in an allowance for doubtful accounts. The allowance for doubtful accounts at September 30, 2024 and 2023 was $0 and $23,629, respectively.
1. Summary of Significant Accounting Policies - (continued)
Property and Equipment
Additions of property and equipment are recorded at cost and depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets beginning when the asset is placed in service. Expenditures that materially extend the useful lives of property and equipment are capital
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 straight-line method to calculate depreciation and amortization of property and equipment. This method is applied over the estimated useful lives of the assets, starting when the asset is placed in service.
Expenditures that materially extend the useful lives of property and equipment are capitalized, meaning they are added to the asset's cost basis and depreciated over time. Routine repairs and maintenance are expensed as incurred, meaning they are deducted from revenue in the period they occur. Learningrx's policy is to expense property and equipment expenditures costing less than $5,000.
For the years ending September 30, 2024 and 2023, the total depreciation expense was $898 for both years. This indicates a consistent level of depreciable assets during those periods. The straight-line method provides a consistent and predictable depreciation expense each year, which can help with financial planning and forecasting for Learningrx franchisees.