When did C12 Group adopt the Accounting Standards Update (ASU) 2016-02, *Leases*?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
In February 2016, The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases, effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. In 2022, the Company adopted this pronouncement. Under this pronouncement, generally, leases with terms of more than 12 months will be recognized in the Consolidated Balance Sheets as an asset (right to use asset) and a liability (lease liability) (See Note 8).
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 C12 Group Franchise Disclosure Document, C12 Group adopted Accounting Standards Update (ASU) 2016-02, Leases, in 2022. This standard is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.
This accounting pronouncement generally requires C12 Group to recognize leases with terms longer than 12 months on their Consolidated Balance Sheets. These leases are recorded as both an asset, representing the right to use the leased item, and a corresponding liability, representing the obligation to make lease payments. Note 8 of the Consolidated Financial Statements provides further details on this matter.
For a prospective C12 Group franchisee, this information is relevant for understanding how C12 Group accounts for its leases. While it may not directly impact the franchisee's operations, it provides insight into the financial practices and reporting standards of the franchisor. Franchisees typically need to understand the franchisor's financial stability and accounting practices as part of their due diligence.