What accounting standard does Eos Worldwide use for revenue recognition?
Eos_Worldwide Franchise · 2025 FDDAnswer from 2025 FDD Document
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash: At times, bank deposit accounts may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash.
Revenue recognition: The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers, which provides a five-step model for recognizing revenue from contracts with customers as follows:
- Identify the contract with a customer
- Identify the performance obligations in the contract
- Determine the transaction price
- Allocate the transaction price to the performance obligations in the contract
- Recognize revenue when or as the performance obligations are satisfied
Under ASC 606, revenue is recognized when control of the promised goods or service is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or service.
Note 1. Nature of Operations and Summary of Significant Accounting Policies (Continued)
Revenue is primarily derived of the following:
Membership/subscriptions: The Company generates revenues by billing its franchisees for subscribed monthly membership fees. The franchisees are billed monthly upfront at their respective subscription renewal date and revenue is recognized at the renewal date. Any membership periods that overlap year-end are reclassified to deferred revenue.
Boot Camp: Boot Camp event revenue is billed and received as part of the initial franchise agreement with new franchisees. These fees received are carried as deferred revenue until it is recognized when the respective franchisee attends the Boot Camp training.
Store income: The Company generates revenues by selling training materials, educational literature and other various products through their website. Revenue is recognized upon shipment, as that is when the customer obtains control of the promised good. The Company has elected to treat shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated product and not as a separate performance obligation.
Warm lead referral: The Company generates revenues by referring general inquiries for coaching services to its franchisees. Once the member holds an initial meeting with the prosp
Source: Item 22 — CONTRACTS (FDD page 74)
What This Means (2025 FDD)
According to the 2025 FDD, Eos Worldwide recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers. This standard provides a five-step model for recognizing revenue from contracts.
The five steps include identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when the performance obligations are satisfied. Under ASC 606, revenue is recognized when control of the promised goods or service is transferred to the company's customers. The amount of revenue recognized reflects the consideration Eos Worldwide expects to receive in exchange for those goods or services.
Eos Worldwide's revenue is derived from several sources, including monthly membership fees billed to franchisees, Boot Camp event fees, store income from selling training materials, warm lead referral fees, and franchise fees. Each revenue stream has specific recognition criteria. For instance, membership fees are billed monthly upfront and recognized at the renewal date, while franchise fees are deferred and recognized monthly over the term of the agreement, typically 45 months. Boot Camp event revenue is deferred until the franchisee attends the training. Store income is recognized upon shipment of the goods.