How does Moes Southwest Grill compute depreciation for buildings?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
Depreciation is computed on a straight-line basis using the following estimated useful lives:
Life Buildings 20-22 years Building improvements Lesser of useful life of the building or up to 20 years Furniture, fixtures and equipment 2-15 years Computer software and hardware 3-5 years Leasehold improvements Lesser of useful life or lease term
Source: Item 23 — Receipts (FDD pages 92–334)
What This Means (2025 FDD)
According to Moes Southwest Grill's 2025 Franchise Disclosure Document, the company calculates depreciation for buildings using the straight-line method. The estimated useful lives for buildings are between 20 to 22 years. For building improvements, depreciation is calculated over the lesser of the useful life of the building or up to 20 years.
This means that the cost of the building is spread evenly over its useful life, which can range from 20 to 22 years. For example, if a building costs $220,000 and has a useful life of 22 years, the annual depreciation expense would be $10,000 ($220,000 / 22 years). This depreciation expense is then deducted from Moes Southwest Grill's profits for tax purposes.
For a prospective Moes Southwest Grill franchisee, understanding these depreciation methods is crucial for financial planning and tax management. The straight-line method provides a consistent and predictable expense each year, aiding in budgeting and forecasting. Franchisees should consult with a financial professional to fully understand the implications of these depreciation methods for their specific circumstances.