What accounting standards update does Batteries Plus Bulbs follow regarding leases?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
om marketing funds, accounts payable, accrued expenses, current portion of capital lease obligation, current portion of contract liability, and due to or from franchisees, because of their short-term nature, approximated fair value as of December 31, 2024 and 2023.
Leases
Based on the criteria set forth in ASC Topic 842, Leases (ASC 842), the Company recognizes right-of-use (ROU) assets and lease liabilities related to leases on the Company's consolidated balance sheets. The Company determines if an arrangement is, or contains, a lease at inception. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities reflect the obligation to make lease payments arising from the lease.
Source: Item 21 — Financial Statements (FDD pages 79–80)
What This Means (2025 FDD)
According to Batteries Plus Bulbs' 2025 Franchise Disclosure Document, the company adheres to ASC Topic 842, Leases (ASC 842) for recognizing right-of-use (ROU) assets and lease liabilities on its consolidated balance sheets. Batteries Plus Bulbs determines if an arrangement is or contains a lease at the beginning of the lease term.
Right-of-use (ROU) assets represent the right to use an underlying asset for the lease term, while lease liabilities reflect the obligation to make lease payments arising from the lease. The lease liability is the present value of the remaining lease payments, and the ROU asset is measured at the amount of the lease liability, adjusted for prepaid rent, unamortized initial direct costs, and any remaining lease incentives received.
Both the lease ROU asset and liability are reduced to zero at the end of the lease term. This accounting standard ensures that Batteries Plus Bulbs appropriately recognizes and reports its lease-related assets and liabilities, providing a transparent view of its financial obligations related to leases.