What is the estimated amortization expense for Management Recruiters in 2023?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
| December 31, 2023 | December 31, 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Estimated useful life (in years) | Gross | Accumulated amortization | Net | Gross | Accumulated amortization | Net | ||||||
| Finite-lived intangible assets: | ||||||||||||
| Franchise agreements | 15 | $ | 25,556 | $ | (4,116) | $ 21,440 | $ | 25,556 | $ | (2,412) $ | 23,144 | |
| Customer lists | 10 | - | - | - | - | - | - | |||||
| Purchased software | 7 | 3,200 | (1,029) | 2,171 | 3,200 | (571) | 2,629 | |||||
| Internally developed software | 5 | 2,683 | (498) | 2,185 | 2,294 | (39) | 2,255 | |||||
| Total finite-lived intangible assets | $ | 31,439 | $ | (5,643) | $ 25,796 | $ | 31,050 | $ | (3,022) $ | 28,028 | ||
| Indefinite-lived intangible assets: | ||||||||||||
| Domain name | Indefinite | $ | 2,226 | $ | - | $ 2,226 | $ | 2,226 | $ | - | $ | 2,226 |
| Trade name | Indefinite | 3,580 | - | $ 3,580 | 3 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 65–66)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, the amortization expense related to intangible assets totaled approximately $2.6 million during the year ended December 31, 2023. Amortization is the process of writing off the cost of an intangible asset over its useful life.
For a prospective Management Recruiters franchisee, understanding amortization expense is crucial for assessing the company's financial health and profitability. It reflects the expense recognized for the decline in value of intangible assets like franchise agreements, customer lists, and software.
The FDD also provides a table that details the estimated useful life, gross value, accumulated amortization, and net value of finite-lived intangible assets as of December 31, 2023. These assets include franchise agreements, customer lists, and purchased and internally developed software. Reviewing this information can give a franchisee insight into the types and values of intangible assets Management Recruiters holds, and how these assets are being amortized over time.