When did Best Brains adopt the new accounting standard updated 2020-05?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
uent events through the date of the audit report, which is the date the financial statements were available to be issued and is of opinion that there were no subsequent events that require specific disclosure in financial statements.
NOTE 4 - ADVERTISMENT EXPENDITURE
Corporation expenses advertising production costs as they are incurred and advertising communications costs the first time the advertising takes place. Advertising expense was $ 302,366.80. for the year ended December 31, 2023.
NOTE 5 - REVENUE RECOGNITION
In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts w
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, the corporation adopted the new accounting standard update 2020-05 effective January 1, 2019, retrospectively. This means that Best Brains applied the new accounting standard to past periods as if it had always been in effect from that date forward.
For a prospective franchisee, this indicates that Best Brains is keeping up with changes in accounting standards. It also means that the financial statements presented in the FDD reflect this updated standard, which could impact how revenue and liabilities are reported. Specifically, the initial franchise fees collected upfront are amortized over the life of the franchise agreement, which is generally five years.
Furthermore, in compliance with the Financial Accounting Standards Board (FASB) new accounting standards for revenue recognition (Topic 606) as adjusted by ASU 202-02, deferred franchise revenue liability of $136,168.01 and $162,151.40 was recognized in 2023 and 2022 respectively. This shows how Best Brains accounts for franchise revenue over time, which is important for understanding the company's financial performance.