Did the adoption of the new accounting policy have a material impact on Bumble Roofing's consolidated financial statements or footnotes?
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 company adopted Accounting Standards Update 2013-03, Financial Instruments – Credit Losses, effective October 1, 2023. This update introduces a "current expected credit loss" (CECL) model, which requires expected credit losses for financial instruments to be based on historical experience, current conditions, and reasonable forecasts. This model replaces the existing incurred loss method and applies to the measurement of credit losses of financial assets such as royalty and accounts receivable, rebates receivable, and notes receivable.
The FDD states that there was no material impact to the consolidated financial statements or footnotes upon adoption of this new accounting policy. This means that the adoption of ASU 2013-03 did not significantly change the reported financial results or require substantial additional disclosures in the footnotes of Bumble Roofing's financial statements.
For a prospective franchisee, this information indicates that the change in accounting policy did not have a significant effect on the company's financial reporting. Therefore, franchisees can be assured that the financial statements from prior years are still comparable to the current statements. This also suggests that Bumble Roofing is managing its financial assets in a way that minimizes credit losses, or that any potential losses are not significant enough to materially affect the financial statements.