What accounting standard did Floors To Go adopt effective January 1, 2023?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
As described in Note 1 to the financial statements, effective January 1, 2023, the Company adopted Accounting Standards Codification Topic 326, Financial Instruments ‐ Credit Losses. Our opinion is not modified with respect to this matter.
Change in Accounting Principle
The Financial Accounting Standards Board issued Accounting Standards Update 2016‐13, Financial Instruments ‐ Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASC 326), in June 2016. The standard replaced the incurred loss impairment methodology with a new methodology that reflects current expected credit losses ("CECL") on financial assets, including receivables, available‐for‐ sale securities, and certain off‐balance sheet commitments. The new methodology requires the measurement of all expected credit losses based on historical experience, current economic conditions, and reasonable and supportable forecasts. The standard also expands the required quantitative and qualitative disclosures for expected credit losses. On January 1, 2023, the Company adopted the standard using a modified retrospective method. The adoption of this standard did not have a material impact on our financial statements and disclosures.
Source: Item 23 — RECEIPTS (FDD pages 47–204)
What This Means (2025 FDD)
According to the 2025 Floors To Go Franchise Disclosure Document, effective January 1, 2023, Floors To Go adopted Accounting Standards Codification Topic 326, Financial Instruments ‐ Credit Losses. This is in accordance with the Financial Accounting Standards Board's Accounting Standards Update 2016‐13, Financial Instruments ‐ Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASC 326), issued in June 2016.
This new standard replaced the incurred loss impairment methodology with a methodology that reflects current expected credit losses (CECL) on financial assets, including receivables, available‐for‐sale securities, and certain off‐balance sheet commitments. The methodology requires measuring all expected credit losses based on historical experience, current economic conditions, and reasonable forecasts. It also expands the required quantitative and qualitative disclosures for expected credit losses.
Floors To Go adopted this standard using a modified retrospective method. However, the adoption of this standard did not have a material impact on their financial statements and disclosures. This means that while the accounting method changed, it did not significantly alter the reported financial results for Floors To Go.