What options does Benjamin Franklin Plumbing have regarding the application of ASU 2023-09?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 requires public entities, on an annual basis, to provide: a tabular rate reconciliation (using both percentages and reporting currency amounts) of (1) the reported income tax expense (or benefit) from continuing operations, to (2) the product of the income (or loss) from continuing operations before income taxes and the applicable statutory federal (national) income tax rate of the jurisdiction (country) of domicile using specific categories, and separate disclosure for any reconciling items within certain categories that are equal to or greater than a specified quantitative threshold. For each annual period presented, ASU 2023-09 also requires all reporting entities to disclose the year-to-date amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign. It also requires additional disaggregated information on income taxes paid (net of refunds received) to an individual jurisdiction equal to or greater than 5% of total income taxes paid (net of refunds received). ASU 2023-09 is effective for nonpublic entities for fiscal years beginning after December 15, 2025. ASU 2023-09 is to be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact that ASU 2023-09 will have on its consolidated financial statements.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to the 2025 FDD, Benjamin Franklin Plumbing is evaluating the impact of ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures." This accounting standards update, issued by the FASB in December 2023, introduces new requirements for disclosing income tax information.
For nonpublic entities like Benjamin Franklin Plumbing, ASU 2023-09 is effective for fiscal years beginning after December 15, 2025. This means Benjamin Franklin Plumbing has the option to wait until its fiscal year starting after this date to implement the changes. However, the company is permitted for early adoption.
Benjamin Franklin Plumbing can choose to apply ASU 2023-09 on a prospective basis, meaning the new disclosure requirements would only apply to financial statements for periods after the adoption date. Alternatively, Benjamin Franklin Plumbing has the option to apply the standard retrospectively, which would involve restating prior period financial statements to reflect the new disclosure requirements. The company is currently assessing the impact of ASU 2023-09 on its consolidated financial statements to determine the best course of action.