How does Stretch Zone account for maintenance and repairs of property and equipment?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
Furniture and fixtures are stated at cost, less accumulated depreciation, and are depreciated on a straightline basis over the estimated useful life of the assets ranging from 60 to 84 months. Maintenance and repairs are expensed as incurred.
Source: Item 3 — Franchisee/Debtor's Warranties. (FDD pages 263–364)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, the company's accounting policy regarding property and equipment states that furniture and fixtures are recorded at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the assets, which ranges from 60 to 84 months.
Importantly, Stretch Zone expenses maintenance and repairs as they are incurred. This means that instead of capitalizing these costs and depreciating them over time, they are recognized as expenses in the period they occur.
For a Stretch Zone franchisee, this accounting practice has implications for their financial reporting. They should expense any costs related to maintenance and repairs of furniture and fixtures in the period that these costs are incurred. This can affect the franchisee's profitability in the short term, as these expenses will reduce net income for that period. However, it simplifies the accounting process, as there is no need to track and depreciate these costs over the asset's life.