Is early adoption of the Accounting Standards Update (ASU) 2019-10 permitted for Best Western?
Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
In November 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-10 "Financial Instruments – Credit Losses (Topic 326): Effective Dates". This ASU was related to prior standards issued by the FASB, including ASU 2019-04 "Codification Improvements", which was issued in April 2019, and ASU 2018-19 "Codification Improvements", which was issued in November 2018 amending ASU 2016-13 "Financial Instruments — Credit Losses", which was issued in June 2016. The main objective of this new guidance is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. ASU 2019-10 defers the effective date for private companies by two years. The standard is effective for fiscal years beginning after December 15, 2022 for private companies, and early adoption is permitted. The Company is currently assessing the impact of the adoption of this guidance.
Source: Item 23 — Receipts (FDD pages 108–413)
What This Means (2025 FDD)
According to Best Western's 2025 Franchise Disclosure Document, early adoption of Accounting Standards Update (ASU) 2019-10 is permitted. This update, issued by the Financial Accounting Standards Board (FASB), addresses financial instruments and credit losses. Its main objective is to provide financial statement users with more decision-useful information about expected credit losses on financial instruments.
ASU 2019-10 defers the effective date for private companies by two years, making the standard effective for fiscal years beginning after December 15, 2022. Best Western is currently assessing the impact of adopting this guidance.
For a prospective Best Western franchisee, this means that Best Western may choose to implement these accounting changes earlier than the mandatory date. Franchisees should stay informed about any changes to Best Western's accounting practices and how these changes might affect their financial reporting and operations.