When did Zoomin Groomin begin amortizing its intangible assets?
Zoomin_Groomin Franchise · 2025 FDDAnswer from 2025 FDD Document
mber 31, 2024, all inventory has been sold.
Notes to the Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounts Receivable
Accounts receivable are recorded for amounts due based on the terms of executed franchise agreements for franchise sales, royalty fees, and other revenues. These receivables are carried at original invoice amount less an estimate made for doubtful receivables, based on a review of outstanding amounts. At December 31, 2024, the Company had accounts receivables of $386,516, and all accounts are deemed collectible.
Other Assets
The Company has three intangible assets consisting of contracts valued at $30,000, goodwill valued at $30,000, and trademarks valued at $30,000. The equal allocation
Source: Item 9 — 01. Financial Statements and Exhibits. (FDD pages 68–156)
What This Means (2025 FDD)
According to Zoomin Groomin's 2025 Franchise Disclosure Document, the company began amortizing its intangible assets in the year ending December 31, 2021. The intangible assets consist of contracts, goodwill, and trademarks, each valued at $30,000. These assets are amortized over a fifteen-year period using the straight-line method.
For a prospective franchisee, this means that Zoomin Groomin recognizes a portion of the cost of these intangible assets as an expense each year. The annual amortization expense is $2,000 per asset, totaling $6,000 per year for all three assets combined. This amortization is a non-cash expense, meaning it reduces the company's reported profit but does not involve an actual outflow of cash.
The FDD states that the intangible assets are measured annually for impairment, which is a standard accounting practice to ensure that the recorded value of the assets does not exceed their recoverable amount. If an asset is deemed to be impaired, the company would recognize an additional expense to write down the asset's value. The total amortization expense for the intangible assets during the next five years will be $6,000 per year.
Understanding how Zoomin Groomin accounts for its intangible assets can help a potential franchisee assess the company's financial health and profitability. It's also important to note that the allocation of value to each intangible asset was determined by the current management and is believed to be an accurate representation of the assets acquired when the company was purchased.