When did Aw adopt ASC-606 and ASU 2021-02, and what method was used?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
t 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 adopted ASC-606 and ASU 2021-02 starting January 1, 2020, using the modified retrospective method. This means that Aw adjusted its financial statements to reflect the new accounting standards as if they had always been in place, but only from the adoption date forward.
Upon adopting these standards, Aw recorded deferred revenue and a cumulative effect to decrease accumulated retained earnings by $58,500 on its balance sheet. This adjustment accounts for the unamortized portion of fees received on behalf of the operating franchise agreements at that time.
For a prospective Aw franchisee, this information provides insight into how the company recognizes revenue and manages its financial reporting. Understanding the impact of these accounting standards can be crucial for assessing the financial health and stability of the franchise system.