What is the sunset date of Topic 848, as deferred by FASB ASU 2022-06, for Checkersrallys?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform Deferral of the Sunset Date of Topic 848, which deferred the sunset date of Topic 848 to December 31, 2024. These ASUs were effective upon issuance, and the Company may elect to apply the amendments prospectively through December 31, 2024 as the transition of reference rates is completed.
On June 16, 2023, the Company modified the reference rate. These modifications replaced the previous LIBOR-based reference rate to SOFR-based rates. Pursuant to the modification of the contractual terms of these instruments, the Company utilized the optional expedients set forth in ASC 848. The modified debt is described in Note 10.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, the sunset date of Topic 848, as deferred by FASB ASU 2022-06, is December 31, 2024. This refers to the Reference Rate Reform (Topic 848) and its deferral, which provides optional expedients and exceptions for applying U.S. GAAP to contract modifications and hedging relationships that reference a rate expected to be discontinued.
This means that Checkersrallys had the option to apply these amendments prospectively through December 31, 2024, as the transition of reference rates was completed. The company modified its reference rate on June 16, 2023, replacing the previous LIBOR-based rate with SOFR-based rates and utilizing the optional expedients set forth in ASC 848.
For a prospective franchisee, this information is relevant in understanding how Checkersrallys manages its financial reporting and debt obligations, particularly concerning the transition from LIBOR to SOFR. While the sunset date has passed, the effects of these accounting standards and modifications would still be reflected in Checkersrallys's financial statements and could impact the company's financial performance and stability.