When did Gokhale Method adopt the new revenue recognition standard?

According to Gokhale Method's 2024 Franchise Disclosure Document, the company adopted ASU 2014-09, Revenue from Contracts with Customers, effective January 1, 2020. This standard replaced most existing revenue recognition guidance in U.S. GAAP. The adoption of this standard did not have a material impact on the company's financial statements.

Under the new standard, Gokhale Method recognizes revenue when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

For a prospective franchisee, this means that Gokhale Method's financial statements from 2020 onward reflect this new revenue recognition standard. The company derives its revenues primarily from royalties and franchise fees. Royalty revenue pertains to a pre-determined amount or percentage for each course taught based on the type of course taught and the number of participants. For royalty, revenue is recognized when students participate in the class. Franchise fees and renewal fees are recognized over the franchise term.