What are the typical useful lives of service stations 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, the typical useful life for service stations is 15 years. This means that Petro Stopping Center depreciates the value of its service stations over a 15-year period for accounting purposes.
For a prospective franchisee, understanding the useful life of assets like service stations is crucial for financial planning. It affects the depreciation expense, which impacts the franchisee's profitability and tax obligations. Knowing that service stations are depreciated over 15 years allows franchisees to better project their long-term capital expenditures and understand the financial implications of asset replacement.
It's important to note that while the FDD specifies a 15-year useful life for service stations, this is subject to review and potential changes. Petro Stopping Center reviews the expected useful lives and depreciation methods of its property, plant, and equipment annually, and adjustments can be made prospectively if necessary. This means that future franchisees should stay informed about any changes to these accounting practices, as they could impact the financial performance of their business.