What accounting standard did Golden Krust Caribbean Restaurant adopt at the beginning of 2023?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
At the beginning of 2023, the Company adopted FASB ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which modifies the measurement of expected credit losses. The Company adopted this new guidance utilizing the modified retrospective transition method. The adoption of this Standard did not have a material impact on the Company's consolidated financial statements but did change how the allowance for credit losses is determined.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to the 2024 Franchise Disclosure Document, Golden Krust Caribbean Restaurant adopted FASB ASU 2016-13 at the beginning of 2023. This accounting standard concerns Financial Instruments - Credit Losses (Topic 326) and modifies how expected credit losses are measured. Golden Krust Caribbean Restaurant implemented this new guidance using the modified retrospective transition method.
The adoption of FASB ASU 2016-13 changed how Golden Krust Caribbean Restaurant determines the allowance for credit losses. However, the FDD states that adopting this standard did not have a material impact on the company's consolidated financial statements.
For a prospective franchisee, this information provides insight into the accounting practices of Golden Krust Caribbean Restaurant. While the change in accounting standard didn't have a material impact, it demonstrates the company's adherence to current accounting regulations and standards, which can be a sign of sound financial management.