What accounting standard update did Cool Binz adopt as of January 1, 2023, and what does it address?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
ber 31, | 2024 | 2023 | (as restated) | | |---|---|---|---|---| | Current income tax expense | $126 | $212 | $726 | | | Deferred income tax expense (recovery) | 356 | 265 | (2,595) | | | Total Income Tax Expense (Recovery) | $482 | $477 | $(1,869) | | As a result of the prior period adjustment, retained earnings as of December 31, 2022 decreased from $4,558, as originally reported, to $1,452.
Notes to Consolidated Financial Statements (dollars in thousands)
4. Adoption of New Accounting Pronouncement
As of January 1, 2023, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-13, *Financial Instruments - Credit Losses: Measurement of Credit
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, the company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments as of January 1, 2023. This update includes changes to the accounting and measurement of financial assets, specifically addressing the company's accounts receivable and notes receivable.
The ASU requires Cool Binz to use its current estimate of all expected credit losses, incorporating reasonable and supportable forecasts. The adoption of this standard was implemented using the modified retrospective method. As a direct result of this accounting change, Cool Binz's retained earnings as of January 1, 2023, decreased from $1,452 to $417.
For a prospective Cool Binz franchisee, this information highlights the company's adherence to updated accounting standards and provides insight into how these standards can impact the company's financial statements. Understanding these changes can be crucial for franchisees when reviewing and interpreting Cool Binz's financial performance and stability.