What accounting standards does Fitstop use to record revenue?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company records revenue in accordance Accounting Standards Board ("FASB") and Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). The transaction price attributable to performance obligations are recognized as the performance obligations are satisfied. The portion of the franchise fee, if any, that is not attributable to a distinct performance obligation are amortized over the life of the related franchise agreements. Commission paid for franchises are amortized over the life of the franchise agreement. The company adopted ASC-606 and ASU 2021-02 using the modified retrospective method
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the company records revenue in accordance with the Accounting Standards Board (FASB) and Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606). This accounting standard aims to establish a uniform basis for recording revenue across various industries.
Specifically, Fitstop recognizes the transaction price attributable to performance obligations as those obligations are satisfied. If any portion of the franchise fee is not directly attributable to a distinct performance obligation, it is amortized over the life of the related franchise agreements. Similarly, commissions paid for franchises are amortized over the life of the franchise agreement.
Fitstop adopted ASC-606 and ASU 2021-02 using the modified retrospective method. This means that Fitstop applied the new revenue recognition standards to existing contracts and franchise agreements, adjusting the financial statements accordingly. This approach ensures that Fitstop's revenue recognition practices are consistent with current accounting standards, providing a transparent view of the company's financial performance.