What was the impact of adopting ASC 326 on Beggars Pizza's financial statements?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
any 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)
Based on the 2025 Beggars Pizza Franchise Disclosure Document, the impact of adopting ASC 326 is not explicitly detailed. However, there is information regarding changes to the estimation of allowance for credit losses. Prior to 2023, Beggars Pizza estimated the allowance based on its historical experience of the relationship between actual bad debts and contract revenues.
In 2023, Beggars Pizza changed its credit policy and, as a result, altered its method for estimating the allowance for credit losses. The company began estimating the allowance based on an analysis of individual customers, adjusting for current conditions and reasonable forecasts. This analysis takes into consideration the age of past due accounts and an assessment of the customer's ability to repay.
The allowance for credit losses was $10,000 at December 31, 2023 and 2022. It is important to note that while the FDD mentions this change in estimation method, it does not explicitly state that this change was due to the adoption of ASC 326, nor does it quantify the specific financial impact of this change on Beggars Pizza's financial statements.