What accounting standards update regarding revenue recognition did Canine Dimensions adopt?
Canine_Dimensions Franchise · 2025 FDDAnswer from 2025 FDD Document
The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which supersedes the existing transaction and industry-specific revenue recognition guidelines. The new guidance requires the recognition of revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Originally the ASU was effective for fiscal years beginning after December 15, 2018 however due to the worldwide pandemic, implementation was delayed a year.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2025 FDD)
According to Canine Dimensions's 2025 Franchise Disclosure Document, the company adopted Accounting Standards Update (ASU) No. 2014-09, issued by the Financial Accounting Standards Board (FASB). This update is titled "Revenue from Contracts with Customers" and supersedes previous revenue recognition guidelines that were specific to certain transactions and industries.
The new standard requires Canine Dimensions to recognize revenue in a way that reflects the transfer of promised goods or services to customers. The revenue amount recognized should represent the consideration Canine Dimensions expects to receive in exchange for those goods or services. This means that Canine Dimensions must carefully evaluate its contracts with franchisees to identify the distinct performance obligations (i.e., the specific goods or services it promises to deliver) and allocate the transaction price to each of those obligations.
Initially, ASU No. 2014-09 was to be effective for fiscal years starting after December 15, 2018. However, due to the worldwide pandemic, the implementation was delayed by one year. This delay provided Canine Dimensions, and other companies, additional time to prepare for the changes required by the new revenue recognition standard. For a prospective franchisee, this indicates that Canine Dimensions is adhering to current accounting standards, which promotes transparency and comparability in its financial reporting.