What was the estimated fair value of cash acquired by 1 800 Packouts from Packouts?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
chase agreement included payment of rollover interest of $2,000,000 wherein the former owner was granted an ownership interest in the Company, which was included in the total consideration paid for the acquisition.
In relation to these acquisitions, the Company elected to early adopt Accounting Standards Update 2021-08, Business Combinations (ASU 2021-08). ASU 2021-08 allows a Company to recognize and measure contract assets and contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers. Accordingly, the contract assets and contrac
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts' 2025 Franchise Disclosure Document, during the year ended December 31, 2022, the company acquired 100% of the equity interests in 1-800-Packouts, LLC (Packouts). As part of this acquisition, the estimated fair value of cash acquired from Packouts was $5,966. This figure represents the cash assets that 1 800 Packouts gained control of as a result of the acquisition.
For a prospective franchisee, this information provides insight into the financial transactions and asset valuations associated with 1 800 Packouts' business acquisitions. Understanding how the company values and accounts for acquired assets can be helpful in assessing the overall financial health and strategic decisions of the franchisor. It also demonstrates the level of detail and transparency 1 800 Packouts provides in its financial reporting.
It's important to note that this cash value is just one component of the total assets acquired during the acquisition, which also included accounts receivable, contract assets, other assets, operating lease right-of-use asset, trade name, franchise agreements, and goodwill. The total purchase price for Packouts was $24,558,417, indicating that the cash acquired was a relatively small portion of the overall deal. The FDD also mentions that the company elected to early adopt Accounting Standards Update 2021-08, which allowed them to recognize contract assets and liabilities at carryover value rather than fair value, potentially affecting the valuation of certain assets.
In summary, the $5,966 represents the estimated fair value of cash that 1 800 Packouts acquired from Packouts during the acquisition in 2022. This information, along with the details of other acquired assets and the total purchase price, provides a more complete picture of the financial aspects of the acquisition and the company's accounting practices.