Did Crave Cookies reassess lease classification, lease identification, or initial direct costs for existing leases prior to the effective date?
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, the company adopted Topic 842 on January 1, 2022. This topic requires lessees to recognize a lease liability and a right-of-use (ROU) asset on a discounted basis for substantially all leases, along with additional disclosures regarding leasing arrangements.
Crave Cookies 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. They also elected the practical expedient to account for nonlease components and the lease components to which they relate as a single lease component for all. Additionally, Crave Cookies 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 liabilities of $11,758. The standard did not significantly affect the company's statements of operations or cash flows.