What gain did Burger King recognize from the step acquisition of Carrols, and where is it included in Burger King's consolidated statements of operations for 2024?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
phical Information*.
Improvements to Income Tax Disclosures – In December 2023, the FASB issued guidance that expands income tax disclosures for public entities, including requiring enhanced disclosures related to the rate reconciliation and income taxes paid information. The guidance is effective for annual disclosures for fiscal years beginning after December 15, 2024, with early adoption permitted. The guidance should be applied on a prospective basis, with retrospective application to all prior periods presented in the financial statements permitted. We are currently evaluating the impact this new guidance will have on our disclosures upon adoption and expect to provide additional detail and disclosures under this new guidance.
Disaggregation of Income Statement Expenses – In November 2024, the FASB issued guidance that requires disclosure of disaggregated information about certain income statement expense line items. The guidance is effective for annual disclosures for fiscal years beginning after December 15, 2026, and subsequent interim periods with early adoption permitted, and requires retrospective application to all prior periods presented in the financial statements. We are currently evaluating the
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 109–124)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, the acquisition of the remaining 85% equity interest of Carrols Restaurant Group was treated as a step acquisition. This required Burger King to remeasure its existing 15% ownership interest in Carrols to fair value. Burger King utilized the $9.55 per share acquisition price to determine the fair value of their existing equity interest.
As a result of this remeasurement, Burger King recognized a gain of $79 million, referred to as the "Step Acquisition Gain." This gain is specifically included in the "(Income) loss from equity method investments" section within Burger King's consolidated statements of operations for 2024.
For a prospective Burger King franchisee, this information provides insight into the financial transactions and accounting practices of the parent company. Understanding these types of transactions can help franchisees assess the financial stability and strategic decisions of Burger King.