What is Petro Stopping Center's depreciation method for other property, plant, and equipment?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
Other property, plant and equipment is depreciated on a straight-line basis over its expected useful life. The typical useful lives of the Company's other property, plant and equipment on initial recognition are as follows:
Land improvements 15 to 25 years Buildings 20 to 50 years Refineries 20 to 30 years Pipelines 10 to 50 years Service stations 15 years Office equipment 3 to 10 years Fixtures and fittings 5 to 15 years
The expected useful lives and depreciation method of property, plant and equipment are reviewed on an annual basis and, if necessary, changes in useful lives or the depreciation method are accounted for prospectively. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the period in which the item is derecognized.
Source: Item 23 — RECEIPTS **RECEIPTS (FDD pages 87–131)
What This Means (2025 FDD)
According to the 2025 FDD, Petro Stopping Center depreciates other property, plant, and equipment using the straight-line method over its expected useful life. The company reviews the expected useful lives and depreciation method of property, plant, and equipment annually, and changes are accounted for prospectively if necessary.
The typical useful lives for different categories of assets are as follows: land improvements are depreciated over 15 to 25 years, buildings over 20 to 50 years, refineries over 20 to 30 years, pipelines over 10 to 50 years, service stations over 15 years, office equipment over 3 to 10 years, and fixtures and fittings over 5 to 15 years.
This depreciation method and the estimated useful lives are important for franchisees to understand, as they affect the reported profitability of the business. The straight-line method evenly distributes the cost of an asset over its useful life, which can provide a consistent expense deduction each year. The annual review of these estimates ensures that the depreciation reflects the actual wear and tear and economic obsolescence of the assets. Prospective franchisees should be aware that changes in these estimates could impact future financial statements.