What financial assets held by Coffee News are subject to ASU 2016-13?

According to Coffee News's 2025 Franchise Disclosure Document, the financial assets held by Coffee News USA, Inc. that are subject to ASU 2016-13 include franchisee accounts receivable. ASU 2016-13 refers to FASB Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which modifies how expected claims and credit losses on certain financial instruments are measured.

Topic 326 mandates the measurement and recognition of expected versus incurred losses for financial assets held by the company. The adoption of this ASU did not have a material impact on Coffee News's financial statements. This means that while Coffee News must account for potential credit losses on franchisee accounts receivable, the initial impact of this accounting change was not significant enough to substantially alter their reported financial results.

For a prospective Coffee News franchisee, this information provides insight into how Coffee News manages its financial reporting and assesses credit risk associated with franchisees. While the adoption of ASU 2016-13 didn't materially impact Coffee News's financials, it demonstrates that the company is adhering to current accounting standards for financial instruments and credit losses. Franchisees may want to inquire about Coffee News's specific policies and procedures for managing franchisee accounts receivable and assessing credit risk to better understand the financial health and stability of the franchise system.