Did Crave Cookies adjust prior period amounts when adopting Topic 842?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
ed by ASU 2018-11, at the beginning of the period in which it is adopted, i.e., the comparatives under ASC 840 option.
The Company adopted Topic 842 on January 1, 2022 (the effective date) using the comparatives under ASC 840 transition method, which applies Topic 842 at the beginning of the period in which it is adopted. Prior period amounts have not been adjusted in connection with the adoption of this standard. The Company elected the package of practical expedients under the new standard, which permits entities to not reassess lease classification, lease identification or initial direct costs for existing or expired leases prior to the effective date. The Company elected the practical expedient to account for nonlease components and the lease components to which they relate as a single lease component for all. Also, the Company elected to keep short-term leases with an initial term of 12 months or less off the balance sheets. The Company did not elect the hindsight practical expedient in determining the lease term for existing leases as of January 1, 2022.
The most significant impact of adoption was the recognition of operating lease ROU assets and operating lease
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, when the company adopted Topic 842 on January 1, 2022, they used the comparatives under ASC 840 transition method. This means that Crave Cookies applied Topic 842 at the beginning of the period in which it was adopted.
As a result of this adoption method, Crave Cookies did not adjust prior period amounts in connection with the adoption of Topic 842. This means that the financial statements for periods before January 1, 2022, were not restated to reflect the new lease accounting standards.
For a potential Crave Cookies franchisee, this information is relevant for understanding how the company accounts for its leases and how this accounting treatment may have changed over time. It's also worth noting that the adoption of Topic 842 led to the recognition of operating lease Right-of-Use (ROU) assets and operating lease liabilities of $11,758, but did not significantly affect the company's statements of operations or cash flows.