How are Right-of-Use (ROU) assets calculated by Apricot Lane?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company applies Accounting Standards Codification (ASC) 842, Leases, in determining whether an arrangement is or contains a lease at the lease inception. An arrangement is considered to include a lease if it conveys the right to control the use of identified property or equipment for a period in excess of twelve months in exchange for consideration. The Company defines control of the assets as the right to direct the use of the identified assets. Right-of-use (ROU) assets represent the Company's right to use leased assets over the term of the lease. Lease liabilities represent the Company's contractual obligation to make lease payments and are measured at the present value of the future lease payment over the lease term using a risk-free rate as permitted under ASC 842. ROU assets are calculated as the present value of the future lease payments adjusted by any deferred rent liability and lease incentives. Refer to footnote 8 for additional lease disclosures.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to the 2025 Apricot Lane Franchise Disclosure Document, the company applies Accounting Standards Codification (ASC) 842, Leases, to determine if an arrangement contains a lease. A lease exists if it conveys the right to control the use of identified property or equipment for over twelve months in exchange for consideration. Control of the assets is defined as the right to direct the use of the identified assets.
Right-of-use (ROU) assets represent Apricot Lane's right to use leased assets over the lease term. Lease liabilities are the company's contractual obligation to make lease payments, measured at the present value of future lease payments over the lease term, using a risk-free rate as permitted under ASC 842.
Specifically, ROU assets are calculated as the present value of the future lease payments, adjusted by any deferred rent liability and lease incentives. For further details, the FDD directs the reader to footnote 8 for additional lease disclosures. This means that when an Apricot Lane franchisee leases property or equipment, the value of their right to use that asset is determined by discounting the future lease payments to their present value, taking into account any rent deferrals or incentives received.