Has Crown Gold Exchange elected to adopt the new accounting standard?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
Specifically for franchisors, The Financial Accounting Standards Board (FASB) has issued an Accounting Standards Update (ASU) to ASC 606, Franchisors—'Revenue from Contracts with Customers (Subtopic 952-606): Practical Expedient' in 2022 which provides a new practical expedient that permits private company franchisors to account for preopening services provided to a franchisee as distinct from the franchise license if the services are consistent with those included in a predefined list within the guidance. The Company has elected to adopt this new standard.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 38)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, Goldmember, LLC, the franchisor, has elected to adopt a new accounting standard. Specifically, in 2022, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) to ASC 606, Franchisors—'Revenue from Contracts with Customers (Subtopic 952-606): Practical Expedient'. This update provides a practical way for private company franchisors to account for preopening services provided to a franchisee.
This new standard allows Crown Gold Exchange to treat preopening services as distinct from the franchise license under certain conditions. These conditions require that the services are consistent with those included in a predefined list within the guidance.
For a prospective Crown Gold Exchange franchisee, this means that the franchisor is using a more streamlined and potentially beneficial method of accounting for revenue related to pre-opening activities. This could provide more transparency in how these services are valued and accounted for in the financial statements.