When did Benihana adopt ASU 2016-13, regarding financial instruments and credit losses?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
In June 2016, the Financial Accounting Standards Board ("FASB ") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This update requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to estimate credit losses. Effective, January 1, 2023, the Company implemented ASU 2016-13. The implementation did not have a material impact on the Company's financial statements.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the company implemented ASU 2016-13, concerning financial instruments and credit losses, on January 1, 2023. This accounting standards update requires Benihana to measure credit losses using a methodology that reflects expected credit losses. This involves considering a broader range of information to estimate these losses.
The FDD indicates that the adoption of ASU 2016-13 did not have a material impact on Benihana's financial statements. This suggests that while the company had to change its methodology for measuring credit losses, the change did not significantly affect its reported financial results.
For a prospective franchisee, this information is relevant for understanding how Benihana accounts for potential credit losses and the timing of changes to accounting practices. While the update itself didn't have a material impact, it's part of a broader picture of how Benihana manages its finances and adapts to evolving accounting standards. Franchisees may want to inquire about the specific methodologies used and any potential future impacts of accounting changes.