What accounting pronouncement did Gokhale Method adopt in relation to credit losses?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
g Pronouncement Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326) which changed how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The most significant change in this standard is a shift from the incurred loss model to the expected loss model. Under the standard, disclosures are required to provide users of the financial statements with useful information in analyzing an entity's exposure to credit risk and the measurement of credit losses. Financial assets held by the Company that are subject to the guidance in FASB ASC 326 were trade accounts receivable.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
New Accounting Pronouncement Adopted (Continued)
Effective January 1, 2023, the Company adopted the new guidance.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to Gokhale Method's 2024 Franchise Disclosure Document, the company adopted FASB ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326), effective January 1, 2023. This pronouncement changed how Gokhale Method measures credit losses for most financial assets and certain other instruments not measured at fair value through net income. The most significant change was a shift from the incurred loss model to the expected loss model.
Under this standard, Gokhale Method is required to provide disclosures that give users of the financial statements useful information in analyzing the company's exposure to credit risk and the measurement of credit losses. The financial assets held by Gokhale Method that are subject to the guidance in FASB ASC 326 were trade accounts receivable.
The adoption of this new guidance was not considered material to Gokhale Method's financial statements and primarily resulted in new disclosures only.