What accounting standard did Cicis adopt as of January 1, 2023, for financial instruments and credit losses?

2022 were $186,610. Accounts receivable, marketing fund, restricted at December 31, 2022 were $1,556,337.

Note 1. Organization and Summary of Significant Accounting Policies (Continued)

The Company adopted Accounting Standards Codification (ASC) 326, Financial Instruments—Credit Losses (ASC 326), as of January 1, 2023, with the cumulative-effect transition method with the required prospective approach. The measurement of expected credit losses under the current expected credit loss (CECL) methodology is applicable to financial assets measured at amortized cost, which include accounts receivable. An allowance for credit losses under the CECL methodology is determined using the loss-rate approach and measured on a collective (pool) basis when similar risk characteristics exist. Where financial instruments do not share risk characteristics, they are evaluated on an individual basis. The adoption of ASC 326 had no material impact on the Company's combined financial statements.

Consistent with ASC 326, the Company offsets accounts receivable with an allowance for credit losses. The allowance for credit losses is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable and is based on historical loss patterns, the number of days that billings are past due, and an evaluation of the potential risk of loss associated with specific accounts. Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Recoveries of accounts receivable previously written off are recorded when received. As of December 31, 2024 and 2023, the Company recorded an allowance for credit losses of $30,166 and $0, respectively.

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)