What was the value of right-of-use operating assets for Golden Krust Caribbean Restaurant in 2023?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
rations and comprehensive loss, nor statements of cash flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Leases:
The Company leases office space and two restaurant locations and determines if an arrangement is a lease at inception. Operating leases are included in ROU operating asset, current lease liability – operating, and long-term liability – operating on the consolidated balance sheet for the year ended December 31, 2022. The Company does not have any finance leases as of December 31, 2022
ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
I am unable to provide the exact value of right-of-use operating assets for Golden Krust Caribbean Restaurant in 2023, as the provided FDD excerpts do not contain this specific figure. However, the 2024 Franchise Disclosure Document does discuss the accounting policies related to leases. Specifically, it mentions that operating leases are included in ROU (Right-of-Use) operating assets on the consolidated balance sheet.
The FDD states that ROU assets represent the company's right to use an underlying asset for the lease term, while lease liabilities represent the obligation to make lease payments. These assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The company uses a risk-free rate to determine the present value of lease payments, and the operating lease ROU asset includes any lease payments made, excluding lease incentives.
For a prospective franchisee, understanding these accounting policies is crucial because it affects how Golden Krust Caribbean Restaurant reports its financial obligations and assets related to leased properties. Since the specific value for 2023 is not disclosed in the provided excerpts, it would be prudent for a potential franchisee to ask the franchisor directly for this information to gain a clearer picture of the company's financial health and lease-related obligations.