Did the adoption of the CECL standard have a material impact on Crisp & Green's financial statements?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company has adopted the current expected credit losses (CECL) methodology for estimating credit losses on financial assets, effective January 1, 2023, utilizing the modified retrospective transition method. The adoption of CECL resulted in changes to the Company's accounting policies, including the recognition of credit losses based on expected future credit losses rather than incurred credit losses. The Company also updated its accounting policies for determining the recoverability of trade receivables, loans, and other financial assets. The adoption of this Standard did not have a material impact on the Company's financial statements but did change how the allowance for credit losses is determined.
Source: Item 23 — RECEIPTS (FDD pages 66–252)
What This Means (2024 FDD)
According to the 2024 Crisp & Green Franchise Disclosure Document, the adoption of the current expected credit losses (CECL) methodology did not have a material impact on the company's financial statements. Crisp & Green adopted the CECL methodology on January 1, 2023, to estimate credit losses on financial assets, utilizing the modified retrospective transition method.
This accounting change involved recognizing credit losses based on expected future credit losses rather than incurred credit losses and updating accounting policies for determining the recoverability of trade receivables, loans, and other financial assets. While the adoption of CECL changed how the allowance for credit losses is determined, it did not significantly affect the overall financial statements.
For a prospective Crisp & Green franchisee, this indicates that while Crisp & Green has updated its accounting practices to comply with the CECL standard, the change has not had a substantial effect on its reported financial performance. This suggests stability in how the company manages and reports its finances, which can be reassuring for potential investors and franchisees.