What accounting standard regarding leases did Bw Premier Collection adopt on December 1, 2022?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
On December 1, 2022, the Company adopted ASU 2016-02, "Leases (Topic 842)," using the modified retrospective approach. This pronouncement requires lessees to recognize a lease liability and a right-of-use asset for each lease with a term longer than twelve months and adds new presentation and disclosure requirements for both lessees and lessors. The recognized liability is measured at the present value of lease payments not yet paid, and the corresponding asset represents the lessee's right to use the underlying asset over the lease term and is based on the liability, subject to certain adjustments. For purposes of the the consolidated financial statements, the standard retains the dual model with leases classified as either operating or finance leases. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. The accounting guidance for lessors remains largely unchanged.
The Company elected the optional transition method to apply the standard as of the effective date. Under this method, the Company has not adjusted its comparative period consolidated financial statements for the effects of the new standard or made the new, expanded required disclosures for years prior to the effective date. Therefore, the consolidated financial statements for the year ended November 30, 2023 reflect the application of ASC 842 while the consolidated financial statements for the year ended November 30, 2022 were not adjusted and continue to be reported under the accounting guidance, ASC 840, Leases ("ASC 840"), in effect for that year.
The Company elected the package of practical expedients permitted under the transition guidance in ASC 842 and did not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs.
The adoption of the new lease standard resulted in the recognition of operating lease ROU assets and lease liabilities for lease arrangements with an initial term greater than twelve months. The adoption of ASC 842 did not have a material impact on the Company's consolidated financial statements.
Source: Item 23 — Receipts (FDD pages 54–203)
What This Means (2025 FDD)
According to the 2025 FDD, on December 1, 2022, Bw Premier Collection adopted ASU 2016-02, "Leases (Topic 842)," using the modified retrospective approach. This accounting standard requires Bw Premier Collection, as a lessee, to recognize a lease liability and a right-of-use asset for leases with terms longer than twelve months. It also introduces new presentation and disclosure requirements for both lessees and lessors. The lease liability is measured at the present value of lease payments not yet paid, while the right-of-use asset represents the lessee's right to use the underlying asset over the lease term and is based on the liability, subject to certain adjustments.
For the consolidated financial statements, the standard retains the dual model, classifying leases as either operating or finance leases. Operating leases result in straight-line expense, whereas finance leases result in a front-loaded expense pattern. The accounting guidance for lessors remains largely unchanged. Bw Premier Collection elected to apply the standard as of the effective date using the optional transition method. Under this method, the company has not adjusted its comparative period consolidated financial statements for the effects of the new standard or made the new, expanded required disclosures for years prior to the effective date.
Therefore, the consolidated financial statements for the year ended November 30, 2023, reflect the application of ASC 842, while the consolidated financial statements for the year ended November 30, 2022, were not adjusted and continue to be reported under the accounting guidance, ASC 840, in effect for that year. Bw Premier Collection elected the package of practical expedients permitted under the transition guidance in ASC 842 and did not reassess prior conclusions related to contracts containing leases, lease classification, and initial direct costs. The adoption of the new lease standard resulted in the recognition of operating lease ROU assets and lease liabilities for lease arrangements with an initial term greater than twelve months. The adoption of ASC 842 did not have a material impact on the company's consolidated financial statements.