For Devon Creek, does the FASB Accounting Standards Codification (ASC) change GAAP?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
The Financial Accounting Standards Board ("FASB") has issued the FASB Accounting Standards Codification ("ASC") that became the single official source of authoritative U.S. generally accepted accounting principles ("GAAP"), other than guidance issued by the Securities and Exchange Commission (SEC), superseding existing FASB, American Institute of Certified Public Accountants, emerging Issues Task Force and related literature. All other literature is not considered authoritative. The ASC does not change GAAP; it introduces a new structure that is organized in an accessible online research system.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, the FASB Accounting Standards Codification (ASC) does not change GAAP (Generally Accepted Accounting Principles). Instead, the ASC serves as a structured, online research system that organizes and presents authoritative U.S. GAAP standards. It consolidates existing FASB, American Institute of Certified Public Accountants, and Emerging Issues Task Force literature into a single, official source, superseding previous guidance.
For a prospective Devon Creek franchisee, this means that the underlying principles of GAAP remain consistent. The ASC simply provides a more accessible and organized way to research and apply these principles when managing the financial aspects of their franchise. This primarily affects how accountants and financial professionals locate and interpret accounting standards, rather than altering the standards themselves.
Devon Creek's financial statements are prepared in accordance with GAAP, and the ASC is the framework used to ensure compliance. The notes to the financial statements in Item 21 of the FDD reference specific ASC topics, such as ASC 606 for revenue recognition and ASC Topic 450 for contingencies, demonstrating how Devon Creek applies these standards in their accounting practices. Therefore, franchisees can be assured that the financial reporting is based on established and consistently applied accounting principles, now organized under the ASC.