What revision was made to the Atwell Suites Consolidated Statements of Comprehensive Income, as indicated in Note 1?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
ements in the United States through a Rabbi trust. The Rabbi trust is considered a variable interest entity, which the Company consolidates because the Company is its primary beneficiary. The marketable securities held by the trust are recorded at market value in accordance with ASC 321, Investments - equity securities, and as such, gains and losses are recognized in the consolidated statements of net income. The fair value of investments quoted on exchanges is based on closing market prices for the last trading day of the year. Non-quoted investments are carried at cost.
The related deferred compensation plan liability is recorded in accordance with ASC 710, Compensation. The obligation is adjusted to reflect changes in the fair value of the amount owed to the employee, with the corresponding charge (or credit) recorded within the consolidated statements of net income. The assets and liabilities are valued at the same amount with no net impact on net income.
During the year ending 31 December, 2024, a misclassification was identified in the prior year financial statements in respect of the unrealized gains and losses relating to securities held by the Rabbi Trust. ASU 2016-01, effective from January 1, 2019, adjusted ASC 320 "Investments - Debt and Equity Securities" such that ASC 320 focused on debt and treatment of equities were covered by ASC 321, "Investments – Equity Securities". Under ASC 321-10-35-1, gains and losses are recognized in net income whereas they we
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to the 2025 FDD, Atwell Suites made a revision to its prior year financial statements due to a misclassification of unrealized gains and losses related to securities held by the Rabbi Trust. This revision was identified during the year ending December 31, 2024. The adjustment was made in accordance with ASU 2016-01, which became effective January 1, 2019, and adjusted ASC 320, "Investments - Debt and Equity Securities," so that ASC 320 focused on debt and treatment of equities were covered by ASC 321, "Investments – Equity Securities".
Under ASC 321-10-35-1, gains and losses are now recognized in net income, whereas previously they were recognized in other comprehensive income. As a result, the comparative periods for December 31, 2022, and 2023, have been revised to include these unrealized gains and losses within the consolidated statements of net income, specifically under 'gains (losses) on securities.' This change does not impact the presentation of the consolidated balance sheets.
The revision increased net income by $18.8 million in 2023 and decreased it by $40.6 million in 2022. Conversely, other comprehensive income decreased by $18.8 million in 2023 and increased by $40.6 million in 2022. These figures are net of related taxes of $6.3 million and $(13.6) million, respectively. While there is no impact on net cash provided by operating activities, the statements of cash flows have also been revised to reflect the changes to net income and other comprehensive income.