What accounting standard does Anago use for leases?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company accounts for leases in accordance with FASB ASC 842 and has capitalized its operating lease described below resulting in a "right to use asset" and corresponding "lease liability" on the balance sheets. The valuation of the right to use asset and the corresponding "lease liability" is recorded at the present value using the risk free interest rate of 2.97%.
In May 2018 the Company entered into an operating lease agreement with a rental company for certain office space requiring monthly lease payments $19,384 maturing in April 2028.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the company adheres to FASB ASC 842 for lease accounting. This standard requires Anago to recognize a 'right to use asset' and a corresponding 'lease liability' on its balance sheets.
Specifically, Anago values these assets and liabilities at the present value, utilizing a risk-free interest rate of 2.97%. This means that when Anago enters into a lease, such as the operating lease agreement for office space with monthly payments of $19,384 maturing in April 2028, it calculates the present value of all future lease payments using this interest rate. This present value is then recorded as both an asset (the right to use the office space) and a liability (the obligation to make future lease payments).
For a prospective franchisee, this information is relevant in understanding how Anago manages its own lease obligations and financial reporting. While this doesn't directly impact the franchisee's operations, it provides insight into the financial practices and transparency of the franchisor. Understanding the franchisor's financial stability and accounting practices can be a key factor in evaluating the overall health and reliability of the franchise system.