What are the typical useful lives of buildings for Petro Stopping Center?
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 Petro Stopping Center's 2025 Franchise Disclosure Document, buildings are depreciated on a straight-line basis over their expected useful life. The typical useful lives of buildings are between 20 to 50 years.
This means that Petro Stopping Center uses a standard accounting practice to spread the cost of its buildings over a period that reflects how long the buildings are expected to contribute to the company's revenue. A prospective franchisee should understand that this depreciation schedule affects the company's reported profits and asset values.
The FDD also states that the expected useful lives and depreciation method of property, plant, and equipment are reviewed annually. This review can lead to changes in useful lives or the depreciation method, which are then accounted for prospectively. This implies that the depreciation expense for Petro Stopping Center's buildings can fluctuate based on these annual reviews. Prospective franchisees should inquire about the factors that could trigger changes in these estimates and how such changes might impact the financial statements.
Furthermore, the document mentions that the energy transition may curtail the expected useful lives of oil and gas industry assets, potentially accelerating depreciation charges. However, management does not expect the useful lives of the Company's reported property, plant and equipment to change and do not consider this to be a significant accounting judgement or estimate. Significant capital expenditure is still required for ongoing projects as well as renewal and/or replacement of aged assets and therefore the useful lives of future capital expenditure may be different. This indicates that while current assets are expected to maintain their useful lives, future capital expenditures might be subject to different depreciation timelines, which could affect the overall financial planning and investment strategies for Petro Stopping Center.