What was the other comprehensive loss/income before reclassifications for Even Hotels in 2022?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
a Rabbi trust. The Rabbi trust is considered a variable interest entity, which the Company consolidates because the Company is its primary beneficiary. The marketable securities held by the trust are recorded at market value in accordance with ASC 321, Investments - equity securities, and as such, gains and losses are recognized in the consolidated statements of net income. The fair value of investments quoted on exchanges is based on closing market prices for the last trading day of the year. Non-quoted investments are carried at cost.
The related deferred compensation plan liability is recorded in accordance with ASC 710, Compensation. The obligation is adjusted to reflect changes in the fair value of the amount owed to the employee, with the corresponding charge (or credit) recorded within the consolidated statements of net income. The assets and liabilities are valued at the same amount with no net impact on net income.
During the year ending 31 December, 2024, a misclassification was identified in the prior year financial statements in respect of the unrealized gains and losses relating to securities held by the Rabbi Trust. ASU 2016-01, effective from January 1, 2019, adjusted ASC 320 "Investments - Debt and Equity Securities" such that ASC 320 focused on debt and treatment of
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, a misclassification was identified in prior year financial statements regarding unrealized gains and losses on securities held by the Rabbi Trust. As a result, the financial statements for the years ending December 31, 2022, and 2023 were revised. The revision involved including unrealized gains and losses within the consolidated statements of net income, specifically under 'gains (losses) on securities.' This change was made in accordance with ASU 2016-01, which adjusted accounting standards for investments in debt and equity securities.
As a result of this revision, for the year ended December 31, 2022, net income decreased by $40.6 million, while other comprehensive income increased by $40.6 million. These figures are net of related tax of $(13.6) million. This means that before considering the tax impact, the gross increase in other comprehensive income due to the reclassification was $40.6 million.
For a prospective Even Hotels franchisee, understanding these revisions is important for accurately interpreting the company's financial performance. It demonstrates how accounting standard changes can impact financial statement presentation and highlights the importance of reviewing restated financials for a clear picture of the company's financial health. While this specific reclassification may not directly impact day-to-day operations, it provides insight into the financial reporting practices of Even Hotels and its parent company.