What was the material impact on Hardees' Consolidated Financial Statements after adopting the Financial Accounting Standards Board's standard regarding credit impairment?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
In June 2016, the Financial Accounting Standards Board ("FASB") issued a standard that requires measurement and recognition of expected versus incurred credit losses for financial assets held, including trade receivables. The standard is effective for interim and annual reporting periods beginning after December 15, 2019 for public entities. For other entities, the standard is effective for interim and annual reporting periods beginning after December 15, 2022. The Company adopted this amendment during the first quarter of 2024. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements.
New Accounting Standards Not Yet Adopted
Income Tax Disclosures
In December 2023, the FASB issued guidance that enhances income tax disclosures including expanded qualitative effective tax rate reconciliation. The standard also requires annual disclosure of income taxes paid disaggregated by federal, state and foreign taxes. The standard is effective for annual reporting periods beginning after December 15, 2024 for public entities. For other entities, the standard is effective for annual reporting periods beginning after December 15, 2025. Early adoption of the guidance is permitted. We are currently evaluating the impact the adoption of this standard will have on our Consolidated Financial Statements.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the company adopted the Financial Accounting Standards Board (FASB) standard regarding credit impairment during the first quarter of 2024. This standard mandates the measurement and recognition of expected versus incurred credit losses for financial assets held, including trade receivables. It became effective for interim and annual reporting periods after December 15, 2022, for entities other than public entities.
However, the key point for prospective Hardees franchisees is that the adoption of this new accounting guidance did not have a material impact on Hardees' Consolidated Financial Statements. This suggests that the change in accounting method did not significantly alter the reported financial results of the company.
While the adoption of the credit impairment standard did not have a material impact, Hardees is still evaluating the impact of new guidance issued by the FASB in December 2023 regarding income tax disclosures. This new guidance enhances income tax disclosures, including expanded qualitative effective tax rate reconciliation, and requires annual disclosure of income taxes paid disaggregated by federal, state, and foreign taxes. Hardees is currently assessing how this new standard will affect its Consolidated Financial Statements.