What accounting standard does Benjamin Franklin Plumbing use to account for the DRYmedic acquisition?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
their estimated fair values as follows:
| Current assets | $ 3,139 |
|---|---|
| Operating lease right-of-use assets | 1,115 |
| Property and equipment | 716 |
| Goodwill | 49,394 |
| Intangible assets and other assets (1) | 38,055 |
| Deferred tax assets | 458 |
| Assets acquired | 92,877 |
| Operating lease liabilities | (1,115) |
| Deferred revenue | (8,089) |
| Other liabilities assumed | (4,471) |
| Purchase Price | $ 79,202 |
(1) Identifiable intangible assets acquired include referral relationships, trademarks, franchise relationships and non-competition agreements which will be amortized on a straight-line basis over their preliminary useful lives of 15 years, 25 years, 15 years and 1 years, respectively.
DRYmedic
On November 4, 2022, the Company entered into a purchase and sale agreement to acquire 100% of the outstanding equity interests of DRYmedic Restoration Services, LLC and its subsidiaries for a purchase price of $45,556. DRYmedic provides disaster restoration services with a focus on water damage restoration, fire damage repair and mold removal and has been acquired to allow for the expansion of the Company's presence within its home services franchising platform. The acquisition was funded with rollover equity of $18,984 and borrowings from the Company's 2022 A-1 loan. Goodwill largely consists of strategic and synergistic opportunities resulting from combining DRYmedic with the Company's existing businesses. The goodwill resulting from this acquisition is tax deductible.
As a result of the transaction, the Company incurred and expensed transaction costs of $1,077, which are included in transactio
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to the 2025 FDD, Benjamin Franklin Plumbing's parent company accounted for the DRYmedic acquisition as a business combination following the guidelines of ASC 805, which is the Accounting Standards Codification. This standard dictates that the fair values are assigned to tangible and identifiable intangible assets and liabilities at the time of acquisition, based on available information. The excess of the purchase price over these fair values is then recorded as goodwill.
Specifically, the purchase price of $45,556 for DRYmedic was allocated to the identifiable assets and liabilities based on their estimated fair values at the time of acquisition. The acquisition was funded through rollover equity of $18,984 and borrowings from the company's 2022 A-1 loan. Transaction costs of $1,077 were incurred and expensed, included in transaction costs on the consolidated statements of comprehensive loss.
For a prospective Benjamin Franklin Plumbing franchisee, this information provides insight into how the parent company manages acquisitions and ensures financial transparency. Understanding the accounting standards used can be beneficial if the franchisee is interested in the financial stability and growth strategy of the parent company. The goodwill resulting from the DRYmedic acquisition is tax deductible, which may have implications for the overall financial health of the company.