Under what conditions is Chatime not required to include the accounts of related parties in its financial statements, according to ASU 2018-17?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
In accordance with the provisions of FASB Accounting Standards Update (ASU) No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities ("ASU 2018-17"), FASB no longer requires nonpublic companies to apply variable interest entity guidance to certain common control arrangements, including leasing arrangements under common control. The Company has applied these provisions to the accompanying financial statements and has determined that the entities affiliated through common ownership and control as disclosed in Note 8, meet the conditions under ASU 2018-17, and accordingly, is not required to include the accounts of the related parties in the Company's financial statements.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the company is not required to include the accounts of related parties in its financial statements under specific conditions outlined in FASB Accounting Standards Update (ASU) No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities.
Specifically, ASU 2018-17 states that nonpublic companies are no longer required to apply variable interest entity guidance to certain common control arrangements, including leasing arrangements under common control. Chatime has applied these provisions to its financial statements.
Chatime determined that the entities affiliated through common ownership and control, as disclosed in Note 8 of the FDD, meet the conditions under ASU 2018-17. Therefore, Chatime is not required to include the accounts of these related parties in its financial statements.