What was the impact of the adoption of Topic 326 on Ledgers' balance sheet?
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) |
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Statements of Changes in Members' Equity
For the Years Ended December 31, 2024, 2023, and 2022
| Capital Contributions | Accumulated Deficit | Total | |
|---|---|---|---|
| Balances, January 1, 2022 | $ 3,200,000 | $ (1,048,086) | $ 2,151,914 |
| Net loss | (447,527) | (447,527) | |
| Balances, December 31, 2022 | 3,200,000 | (1,495,613) | 1,704,387 |
| Adoption of Topic 326 | (42,286) | (42,286) | |
| Net loss (Restated) | (506,600) | (506,600) | |
| Balances, December 31, |
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the adoption of Topic 326 had a specific impact on the company's balance sheet. The adoption of Topic 326 resulted in a reduction of $42,286 to the accumulated deficit, which consequently reduced the total balance by the same amount. This adjustment is reflected in the restated balances as of December 31, 2023.
Additionally, another table provides further details on the impact of adopting Topic 326. According to this table, the adoption of Topic 326 resulted in an increase of 42,286. However, this table also includes an allowance for credit losses, which had a negative impact of $26,543.
These adjustments reflect changes in accounting standards and their subsequent effect on Ledgers' financial reporting. Prospective franchisees should understand how such accounting changes can impact the franchisor's financial statements, as this can provide insights into the financial health and stability of the company.