What practical expedients did Learningrx elect when adopting FASB Topic 842, Leases?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
g both checking and money market accounts. Deposits are carried at cost. The carrying amount of deposits is displayed on the balance sheet as Cash and Cash Equivalents. The FDIC insurance covers the first $250,000 of deposits per financial institution.
5. Leases
The Company adopted FASB Topic 842, Leases, using the modified retrospective approach with October 1, 2021 as the date of initial adoption. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. In addition, the Company elected the practical expedient to use hindsight in determining the lease term for existing leases, which resulted in shortening the lease terms for certain existing leases and the useful lives of correspon
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, when the company adopted FASB Topic 842, Leases, it used the modified retrospective approach with October 1, 2021, as the initial adoption date. Learningrx elected to use the package of practical expedients permitted under the transition guidance, which allowed them to carry forward the historical lease classification.
In addition, Learningrx elected the practical expedient to use hindsight in determining the lease term for existing leases. This resulted in shortening the lease terms for certain existing leases and the useful lives of corresponding leasehold improvements because certain options to renew were not reasonably certain.
The adoption of this standard required Learningrx to restate amounts as of October 1, 2021, leading to an increase in operating lease Right-of-Use (ROU) assets of $362,438 and an increase in operating lease liabilities of $362,438. This means that Learningrx recognized the assets and liabilities associated with its leases on its balance sheet, as required by the new accounting standard, and the initial adoption had a notable impact on its financial statements.