How did Bumble Roofing apply the change in accounting policy related to income taxes?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
ransactions with related parties.
Emphasis of Matter – Change in Accounting Policy
We draw attention to Note 10 of the consolidated financial statements, which describes a change in the Company's accounting policy of allocating a portion of the Company's parent company's provision or credit for income taxes. During 2024, the Company has opted to no longer record an allocation for its parent company's provision or credit for income taxes, as allowed by Accounting Standards Codification 740, Income Taxes, as it better reflects the specific tax position of the Company.
This change has been applied retrospectively. As a result, the Company has restated its comparative consolidated financial statements to reflect the new policy. The effect of this change is disclosed in Note 10, including adjustments to the opening balance of member's equity. Our opinion is not modified in respect of this matter.
Atlanta, GA December 13, 2024
OUTDOOR LIVING BRANDS HOLDCO, LLC CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2024, 2023, AND 2022
ASSETS
| 2024 | 2023 ("As Restated") | 2022 ("As Restated") | |
|---|---|---|---|
| Current Assets | |||
| Cash | $ 2,941,232 | $ 1,737,401 | $ 1,492,295 |
| Royalties and accounts receivable, net | 10,215,595 | 8,416,631 | 5,544,544 |
| Rebates receivable, |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, the company changed its accounting policy in 2024 regarding the allocation of its parent company's income taxes. Previously, Bumble Roofing recorded an allocation for its parent company's provision or credit for income taxes. However, in 2024, the company opted to discontinue this practice, as permitted by Accounting Standards Codification 740, Income Taxes, because it was determined that doing so would more accurately reflect Bumble Roofing's specific tax position.
This change in accounting policy was applied retrospectively, meaning that Bumble Roofing restated its comparative consolidated financial statements to reflect the new policy as if it had always been in place. The effect of this change is detailed in Note 10 of the financial statements, which includes adjustments to the opening balance of member's equity. Specifically, the change in accounting policy resulted in an increase to member's equity as of September 31, 2021, of $26,757.
For a prospective Bumble Roofing franchisee, this change primarily affects the presentation and interpretation of the company's financial statements. The restatement ensures that financial data from previous years is comparable and reflects the company's current accounting practices. While the change itself doesn't directly impact the franchisee's day-to-day operations, understanding these accounting adjustments is crucial for accurately assessing the company's financial performance and stability. Franchisees should review Note 10 in detail to fully understand the implications of this change and how it affects the financial data presented.