What accounting model does Bumble Roofing's ASU 2013-03 adoption introduce?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
Effective October 1, 2023, the Company adopted the requirements of ASU 2013-03, Financial Instruments – Credit Losses. This ASU introduces a "current expected credit loss" ("CECL") model which requires all expected credit losses for financial instruments held at the reporting date to be based on historical experience, current conditions, and reasonable supportable forecasts. The CECL model replaces the existing incurred loss method and is applicable to the measurement of credit losses of financial assets. Under the standard, disclosures are required to provide users of the consolidated financial statements with useful information in analyzing an entity's exposure to credit risk and the measurement of credit losses. Financial assets held by the Company that are subject to the guidance in FASB Accounting Standards Codification ("ASC") 326 were royalty and accounts receivable, rebates receivable, and notes receivable. There was no material impact to the consolidated financial statements or footnotes upon adoption of this new accounting policy.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, the adoption of ASU 2013-03 introduces a "current expected credit loss" (CECL) model. This accounting standard became effective for Bumble Roofing on October 1, 2023.
The CECL model requires Bumble Roofing to base all expected credit losses for financial instruments held at the reporting date on historical experience, current conditions, and reasonable supportable forecasts. This model replaces the previously used incurred loss method and applies to the measurement of credit losses of financial assets.
The financial assets held by Bumble Roofing that are subject to the FASB Accounting Standards Codification (ASC) 326 include royalty and accounts receivable, rebates receivable, and notes receivable. The adoption of this new accounting policy did not have a material impact on the consolidated financial statements or footnotes.