Has Coffee News adopted ASC 606 Revenue from Contracts with Customers in its financial statements?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
e accompanying notes and independent accountant's review report.
2703203 Manitoba, Ltd
Notes to Financial Statements July 31, 2024 and 2023
1. Summary of Significant Accounting Policies
Nature of Business
2703203 Manitoba, Ltd (the Company) is a Canadian company that owns the worldwide trademarks and franchise rights for Coffee News, a weekly restaurant publication. Revenues are generated from the sale of franchises, promotional material, and the collection of weekly royalty fees and transfer fees within Canada. Receivables arise from the sale of franchises, collection of franchise fees and the sale of promotional material. Financial reporting is in Canadian dollars because it is the functional currency.
Basis of Accounting
The Company's policy is to prepare its financial statements on the income tax basis of accounting under which certain revenues and expenses are recognized in the determination of income in different reporting periods than they would be if the financial statements were prepared in accordance with generally accepted accounting principles. The tax basis differs primarily because the company has not provided an accrual for income taxes and has not adopted ASC 606 Revenue from Contracts with Customers.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News FDD, Coffee News USA, Inc. prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. However, 2703203 Manitoba, Ltd, a Canadian company that owns the worldwide trademarks and franchise rights for Coffee News, does not prepare its financial statements in accordance with generally accepted accounting principles.
The FDD states that 2703203 Manitoba, Ltd's policy is to prepare its financial statements on the income tax basis of accounting, where certain revenues and expenses are recognized in different reporting periods than if prepared under generally accepted accounting principles. The tax basis differs primarily because the company has not provided an accrual for income taxes and has not adopted ASC 606 Revenue from Contracts with Customers.
For a prospective Coffee News franchisee, this means that the financial statements for Coffee News USA, Inc. are audited by an independent auditor in accordance with accounting principles generally accepted in the United States of America. However, the financial statements for 2703203 Manitoba, Ltd are not prepared in accordance with generally accepted accounting principles, and have not adopted ASC 606 Revenue from Contracts with Customers.