What was the impact of the adoption of Topic 326 on Ledgers' accumulated deficit?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
) | | (82,735) | | (6,284) | | Other income | | = | | (115,395) | | 554 | | Other expense | | 485 | | 4,014 | | 3,246 | | Total other (income) expense | (2 | 24,290) | | (194,116) | _ | (2,484) | | Loss before income taxes | (4 | 65,991) | | (604,600) | | (600,527) | | Income tax benefit | (1 | 04,000) | | (98,000) | , | (153,000) | | Net loss | $ (30 | 61,991) | $ | (506,600) | $ | (447,527) |
${\bf LOYALTY; BUSINESS; SERVICES,; LLC; (FORMERLY; FIDE; HOLDING,; LLC)}$
Statements of Changes in Members' Equity
For the Years Ended December 31, 2024, 2023, and 2022
| | Capital Contributions | Accumulated Deficit | Total | |----------------------
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the adoption of Topic 326 in 2023 increased the accumulated deficit by $42,286. The accumulated deficit represents the total losses of the company over its lifetime. This adjustment was made to restate the financials for 2023.
Specifically, the table shows that the accumulated deficit as of December 31, 2022, was $(1,495,613). After the adoption of Topic 326, the accumulated deficit increased to $(1,495,613) - $42,286 = $(2,044,499). This change reflects an accounting adjustment that Ledgers made to comply with new accounting standards.
For a prospective franchisee, this information is relevant because it provides insight into the financial performance and accounting practices of Ledgers. While an increase in accumulated deficit might seem negative, it's important to understand the context. In this case, it's due to the adoption of a new accounting standard, which doesn't necessarily reflect a deterioration in the company's operational performance. However, it would be prudent for a potential franchisee to inquire about the reasons for the accounting change and its potential impact on future financial statements.