What method did Floors To Go use when adopting the new accounting standard?

According to the 2025 Floors To Go Franchise Disclosure Document, when adopting Accounting Standards Update 2016-13, which concerns financial instruments and credit losses, Floors To Go used a modified retrospective method on January 1, 2023. This update introduced a shift from the incurred loss impairment methodology to one that reflects current expected credit losses (CECL) on financial assets. This includes receivables, available-for-sale securities, and certain off-balance sheet commitments.

The new CECL methodology requires measuring all expected credit losses based on historical experience, current economic conditions, and reasonable forecasts. It also expands the required disclosures for expected credit losses, both quantitative and qualitative. However, the FDD states that the adoption of this standard did not have a material impact on Floors To Go's financial statements and disclosures.

For a prospective Floors To Go franchisee, this information provides insight into the financial reporting practices of the franchisor. The adoption of new accounting standards can sometimes significantly alter financial statements, but in this case, the impact was not material. This suggests a degree of stability and potentially lower risk in interpreting Floors To Go's financial performance. Franchisees may want to further investigate the specific effects of this accounting change during their due diligence to fully understand any implications.