When did Golden Krust Caribbean Restaurant adopt the new lease accounting standard?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
As discussed in Note 2 to the financial statements, in 2022 the Company adopted new accounting guidance for leases. The guidance requires lessees to recognize a right-of-use asset and corresponding liability for all operating and finance leases with lease terms greater than one year. Our opinion is not modified with respect to this matter.
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 new accounting guidance for leases in 2022. This is in reference to the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2016-02, also known as ASC 842.
This new guidance requires Golden Krust Caribbean Restaurant, as a lessee, to recognize a right-of-use asset and a corresponding liability for all operating and finance leases with lease terms greater than one year. This means that leases, such as for office space or restaurant locations, which were previously treated as off-balance sheet items, now need to be reflected on the company's balance sheet.
For a prospective Golden Krust Caribbean Restaurant franchisee, this change primarily affects the franchisor's financial statements, providing a more transparent view of the company's lease obligations. It did not modify the auditor's opinion on the financial statements. Franchisees should be aware of these accounting changes as they provide a more complete picture of the financial health and obligations of Golden Krust Caribbean Restaurant.