What was the lease liability for Crave Cookies in 2022?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
lities, end of year | $ 1,279,141 | $ 654,671 |
Note 3. Operating Leases - ASC 842
Accounting Policies
The Company determines if an arrangement is a lease or contains a lease at inception. Leases result in the recognition of ROU assets and lease liabilities on the balance sheets. ROU assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease, measured on a discounted basis. The Company determines lease classification as operating or finance at the lease commencement date.
Crave Cookies Franchising, LLC Notes to Financial Statements December 31, 2023 and 2022
At lease commencement, the lease liability is measured at the present value of the lease payments over the lease term. The ROU asset equals the lease liability adjusted for any initial direct costs, prepaid or deferred rent, and lease incentives. The Company has made a policy election to use a risk-free rate (the rate of a zero-coupon U.S. Treasury instrument) for the initial and subsequent measurement of all lease liabilities. The risk-free rate is determined using a period comparable with the lease term.
The lease term may include options to extend or to terminate the lease that the Company is reasonably certain to exercise. Lease expense is generally recognized on a straight-line basis over the lease term.
The Company has elected not to record leases with an initial term of 12 months or less on the balance sheets. Lease expense on such leases is recognized on a straight-line basis over the lease term.
Nature of Leases
The Company has entered into the following lease arrangements:
Operating Leases
The Company leased a vehicle that expired in 2023 and had monthly payments of $674.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the company's accounting policies dictate how leases are handled. Crave Cookies recognizes Right-of-Use (ROU) assets and lease liabilities on its balance sheets for leases exceeding a 12-month term. These ROU assets represent the right to use an asset for the lease term, while lease liabilities represent the obligation to make lease payments, measured on a discounted basis. The company classifies leases as either operating or finance leases at the commencement date.
At the beginning of a lease, the lease liability is calculated as the present value of lease payments over the lease term. The ROU asset is then determined by adjusting the lease liability for any initial direct costs, prepaid or deferred rent, and lease incentives. Crave Cookies uses a risk-free rate, based on a zero-coupon U.S. Treasury instrument, for measuring all lease liabilities, with the rate determined using a period comparable to the lease term. The lease term may include options to extend or terminate the lease if the company is reasonably certain to exercise those options. Lease expenses are generally recognized on a straight-line basis over the lease term.
The provided financial statements include information about vehicle leases entered into by Crave Cookies. In 2023, the company leased a vehicle that expires in 2025 with monthly payments of $576. The FDD does not specify the total lease liability for 2022. A prospective franchisee should inquire with Crave Cookies about the specific lease liabilities recorded on their balance sheet for 2022 to gain a clearer understanding of their financial obligations related to leases during that period.