What package of practical expedients did Crave Cookies elect under the new lease standard?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, when adopting Topic 842 on January 1, 2022, Crave Cookies elected a package of practical expedients under the new lease standard. This election allowed Crave Cookies to avoid reassessing lease classification, lease identification, or initial direct costs for existing or expired leases before the effective date.
Additionally, Crave Cookies chose to account for nonlease components and related lease components as a single lease component for all leases. This simplifies the accounting process by combining the costs of lease and non-lease elements.
Crave Cookies also elected to keep short-term leases, defined as those with an initial term of 12 months or less, off the balance sheets. However, Crave Cookies did not elect the hindsight practical expedient when determining the lease term for existing leases as of January 1, 2022. This means they did not use knowledge of events that occurred after the lease commencement date to determine the lease term.