According to Aw's accounting policies, when are revenues recognized?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
pass through directly to the members' and is reported on their individual income tax returns.
3. REVENUE RECOGNITION
The Company records revenue in accordance Accounting Standards Board ("FASB") and Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). The transaction price attributable to performance obligations are recognized as the performance obligations are satisfied. The portion of the franchise fee, if any, that is not attributable to a distinct performance obligation are amortized over the life of the related franchise agreements. The company adopted ASC-606 and ASU 2021-02 using the modified retrospective method starting with January 1, 2020. Upon adoption, the Company recorded deferred revenue, and a cumulative effect to decrease accumulated retained earnings by $58
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the company records revenue based on Accounting Standards Board (FASB) and Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). This means Aw recognizes revenue when performance obligations are satisfied.
For Aw franchisees, this means that the portion of the franchise fee that is attributable to a distinct performance obligation is recognized as the performance obligations are satisfied. Any part of the franchise fee not tied to a specific performance obligation is amortized over the life of the franchise agreement.
Aw adopted ASC-606 and ASU 2021-02 using the modified retrospective method starting January 1, 2020. Upon adoption, the company recorded deferred revenue, and a cumulative effect to decrease accumulated retained earnings by $58,500 on the Balance Sheet for the unamortized portion of fees received on behalf of the then operating franchise agreements.