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What liabilities were assumed by 1 800 Packouts from Mosquito Shield?

Q: What liabilities were assumed by 1 800 Packouts from Mosquito Shield?

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)

1_800_Packouts Franchise · 2025 FDD

Answer 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 ending December 31, 2022, the company acquired Mosquito Shield Finance Corporation. As part of this acquisition, 1 800 Packouts assumed certain liabilities from Mosquito Shield. The total liabilities assumed were valued at $10,935,213.

Specifically, the FDD mentions that the company elected to early adopt Accounting Standards Update 2021-08, Business Combinations (ASU 2021-08). This update allows the company to recognize and measure contract assets and contract liabilities in accordance with ASC 606, Revenue from Contracts with Customers. As a result, the contract assets and liabilities were recognized at carryover value from Mosquito Shield, rather than at fair value.

For a prospective franchisee, this information is relevant because it provides insight into the financial transactions and accounting practices of 1 800 Packouts during acquisitions. Understanding the liabilities assumed during acquisitions can help franchisees assess the financial stability and management practices of the franchisor. It's important to note that the liabilities assumed are a part of the overall financial picture and should be considered in conjunction with the assets acquired and the total purchase price.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.

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