What new accounting standard did Checkersrallys adopt in the fiscal year ended January 2, 2023?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes ("ASU 2019-12"). The standard was issued as part of the Board's simplification initiative. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC 740. The update makes several amendments to Topic 740 including a change in the way an entity recognizes franchise tax. ASU 2019-12 is effective for entities that are not public business entities for annual periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. Upon evaluation of the pronouncement, the Company has adopted the standard as of January 4, 2022, and determined it has no material impact on the financial statements and related disclosures.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the company adopted ASU 2019-12, which simplifies accounting for income taxes, effective January 4, 2022. This standard, issued by the FASB as part of their simplification initiative, removes certain exceptions to general principles in ASC 740. The update affects how Checkersrallys recognizes franchise taxes.
For prospective franchisees, this adoption means Checkersrallys's financial statements for the fiscal year ending January 2, 2023, reflect these simplified accounting methods for income taxes. However, Checkersrallys determined that the adoption of ASU 2019-12 had no material impact on their financial statements or related disclosures.
It is important for franchisees to understand that while the adoption of this standard did not have a material impact in this specific instance, changes in accounting standards can sometimes affect a company's reported financial performance and position. Franchisees should stay informed about any future changes in accounting standards and how they might affect Checkersrallys's financial reporting.