When did Body Brain Center adopt ASC Topic 842, *Leases*?
Body_Brain_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company adopted ASC Topic 842, Leases ("ASC 842") on January 1, 2022 using the modified retrospective transition method. ASC 842 provides a number of optional practical expedients in transition. The Company elected the package of practical expedients permitted under the transition guidance, which allows the Company to carry forward the historical lease classification, the assessment whether a contract is or contains a lease and initial direct costs for any leases that exist prior to adoption of the new standard. The Company has also elected the practical expedient to not separate the non-lease components from lease components. In addition, the Company elected the short-term lease recognition exemption for all leases that have a lease term of 12 months or less; instead, for short-term leases, lease expense is recognized on a straight-line basis over the lease term.
The Company determines if a contract contains a lease at inception of the arrangement based on whether it has the right to obtain substantially all the economic benefits from the use of an identified asset and whether it has the right to direct the use of an identified asset in exchange for consideration. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets are recognized at the same amount as the lease liability, adjusted for lease incentives received, any existing prepaid or accrued rent, or unamortized initial direct costs. Lease liabilities are recognized at the present value of the future lease payments at the lease commencement date. The future lease payments included in the lease liability may include options to extend the term of a lease, if the Company determines that it is reasonably certain that the option to extend will be exercised at the terms available in the lease agreement.
Source: Item 23 — RECEIPT (FDD pages 43–178)
What This Means (2025 FDD)
According to the 2025 Body Brain Center Franchise Disclosure Document, Body Brain Center adopted ASC Topic 842, Leases, on January 1, 2022, using the modified retrospective transition method. ASC 842 provides optional practical expedients in transition, and Body Brain Center elected the package of practical expedients permitted under the transition guidance. This allows Body Brain Center to carry forward the historical lease classification, the assessment of whether a contract is or contains a lease, and initial direct costs for any leases that existed prior to the adoption of the new standard.
Body Brain Center also elected the practical expedient to not separate the non-lease components from lease components. Additionally, Body Brain Center elected the short-term lease recognition exemption for all leases that have a lease term of 12 months or less. For these short-term leases, lease expense is recognized on a straight-line basis over the lease term.
Body Brain Center determines if a contract contains a lease at the inception of the arrangement. This determination is based on whether it has the right to obtain substantially all the economic benefits from the use of an identified asset and whether it has the right to direct the use of an identified asset in exchange for consideration. Right-of-use (ROU) assets represent Body Brain Center's right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets are recognized at the same amount as the lease liability, adjusted for lease incentives received, any existing prepaid or accrued rent, or unamortized initial direct costs. Lease liabilities are recognized at the present value of the future lease payments at the lease commencement date, including options to extend the lease term if it is reasonably certain that the option will be exercised.