What accounting standards must Bumble Roofing's consolidated financial statements adhere to?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
TING POLICIES (Continued)
Principles of Consolidation and Presentation (Continued)
The accompanying consolidated financial statements present the operations, equity and cash flows of OLB Holdco and its wholly-owned subsidiaries as of and for the years ending September 30, 2024, 2023, and 2022. Intercompany transactions and balances have been eliminated in consolidation.
The Company follows accounting standards set by the Financial Accounting Standards Board ("FASB"). The FASB sets accounting principles generally accepted in the United States of America ("GAAP").
Adoption of New Accounting Policies
Accounting Standards Update 2016-02, Leases
Effective October 1, 2022, the Company adopted Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842). The objective of this ASU is to increase transparency and comparability in financial reporting by requiring balance sheet recognition of leases and note disclosure of certain information about lease arrangements. The Company adopted ASU 2016-02 using the modified retrospective method. This method allows the standard to be applied retrospectively through a cumulative catch-up adjustment to equity recognized upon adoption, if necessary. Adoption of ASU 2016-02 did not result in changes to the Company's beginning equity balance on October 1, 2022. Upon adoption, the Company elected to use risk-free discount rate, an option only available to private entities, when calculating the present value of future lease payments if an interest rate is not explicit in a lease agreement.
Adoption of this ASU resulted in the Company recording right-of-use ("ROU") assets of $3,397,752 and corresponding operating lease liabilities of $3,953,689 on October 1, 2022 which represents the present value of future lease payments on the Company's office and warehouse leases further detailed in Note 8 at the date of adoption. The difference in ROU asset and operating lease liability at inception is due to a deferred rent and certain tenant allowances of $555,937 at October 1, 2022 which has been netted against the RO
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, the company follows accounting standards set by the Financial Accounting Standards Board (FASB). The FASB sets accounting principles generally accepted in the United States of America (GAAP). This means that the consolidated financial statements of OLB Holdco, which includes Bumble Roofing as a wholly-owned subsidiary, are prepared in accordance with GAAP.
For a prospective Bumble Roofing franchisee, this indicates that the financial statements presented in the FDD are prepared using a consistent and widely recognized set of accounting rules. This allows for easier comparison of Bumble Roofing's financial performance with other companies that also follow GAAP. It also provides a level of assurance that the financial information is presented fairly and accurately.
Furthermore, the FDD mentions the adoption of new accounting policies, such as Accounting Standards Update 2016-02, Leases (Topic 842) and Accounting Standards Update 2013-03, Financial Instruments – Credit Losses. These updates reflect changes in accounting standards and the company's efforts to remain compliant with current regulations. The adoption of ASU 2016-02 resulted in recording right-of-use assets of $3,397,752 and corresponding operating lease liabilities of $3,953,689 on October 1, 2022. The adoption of ASU 2013-03 did not have a material impact on the consolidated financial statements.