Under ASC 606, what conditions must be met for All Team to recognize revenue?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
In 2019, the Company adopted ASC 606, Revenue from Contracts with Customers, which amended the existing accounting standards for revenue recognition. Consequently, the Company recognizes revenue when the services are provided, persuasive evidence of an arrangement exists, the price is fixed and collection is reasonably assured in accordance with ASC 606.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 33)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the company adopted ASC 606, Revenue from Contracts with Customers, in 2019. As a result, All Team recognizes revenue when specific conditions are met. These conditions are that the services are provided, persuasive evidence of an arrangement exists, the price is fixed, and collection is reasonably assured.
For a prospective All Team franchisee, this means that All Team's revenue recognition is tied to fulfilling its service obligations, having clear agreements, set pricing, and confidence in payment collection. This accounting standard ensures that revenue is recognized when it is earned and realized or realizable.
Understanding these revenue recognition policies is crucial for franchisees as it impacts how All Team's financial performance is reported. Franchisees should be aware of these conditions to better interpret All Team's financial statements and understand the basis for their financial reporting.