What depreciation method does Remax use for property and equipment?

According to Remax's 2025 Franchise Disclosure Document, the company records property and equipment at cost initially. Depreciation is calculated using the straight-line method over the estimated useful lives of each asset class, starting when the property is placed in service. For leasehold improvements, amortization also follows the straight-line method but is applied over the shorter of either the estimated benefit period of the related assets or the lease term.

This means that Remax systematically reduces the value of its assets (like buildings, equipment, and improvements to leased spaces) over time, reflecting their wear and tear. The straight-line method evenly distributes the cost of the asset over its useful life. For example, if Remax purchases a computer for $3,000 with an estimated useful life of 3 years, the annual depreciation expense would be $1,000.

For a prospective Remax franchisee, understanding these accounting practices is important for interpreting the company's financial statements. It provides insight into how Remax manages its assets and reports its financial performance. Knowing that Remax uses the straight-line method allows franchisees to better understand the depreciation expense reported on the income statement and how it impacts profitability. Also, the amortization of leasehold improvements is dependent on the lease term, which could vary.

It's worth noting that while this excerpt describes Remax's depreciation method, it doesn't specify the estimated useful lives for different asset classes. This information would be helpful for a more detailed analysis. Franchisees may want to inquire about these specific timelines to gain a clearer picture of how Remax accounts for its assets.