When did Beggars Pizza adopt the new accounting standard ASC 326, Credit Losses?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
sured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash deposits.
Royalty Receivables – Royalty receivables are stated at the net collectible amount reduced by an allowance for credit losses. The Company does not charge interest or late fees on amounts past due. Prior to 2023, the Company estimated the allowance based on its historical experience of the relationship between actual bad debts and contract revenues. As a result of the changes in the Company's credit policy during 2023, the Company changed to estimating the allowance based on an analysis of individual customers adjusted for current conditions and reasonable forecasts, taking into consideration t
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the company adopted the new accounting standard ASC 326, Credit Losses, in 2023. This change impacted how Beggars Pizza estimates the allowance for royalty receivables. Prior to 2023, the company based its allowance on historical experience, looking at the relationship between actual bad debts and contract revenues.
However, in 2023, Beggars Pizza shifted its approach due to changes in its credit policy. The company began estimating the allowance based on an analysis of individual customers, taking into account current conditions, reasonable forecasts, the age of past due accounts, and the customer's ability to repay.
It's important to note that the allowance for credit losses remained consistent at $10,000 for both December 31, 2023, and December 31, 2022. This change in accounting policy reflects a more granular and forward-looking approach to assessing potential credit losses from royalty receivables, aligning with the requirements of ASC 326.