How does Pearce Bespoke account for recently issued Accounting Standards Updates (ASU)?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company has adopted all recently issued Accounting Standards Updates ("ASU"). The adoption of the recently issued ASUs, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
During the period ended December 31, 2023, the Company adopted Accounting Standards Update (ASU) No. 2016-02, Leases, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. As a result of implementing ASU No. 2016-02, the Company recognized a right-of use asset and lease liability of $47,474 on its balance sheet as of December 31, 2023. The adoption did not result in a significant effect on amounts reported in the statement of operations and members' equity (deficiency) for the period ended December 31, 2023.
New Accounting Standard – In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326). Topic 326 aims to replace the incurred loss impairment methodology under current GAAP with a methodology that reflect expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Topic 326 was subsequently amended by ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures; ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses; 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842); and ASU 2019-05, Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief. The Company was incorporated January 22, 2023, therefore, Topic 326 did not result in any material adjustments to balance sheet accounts, net loss, or retained earnings (deficit).
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the company has adopted all recently issued Accounting Standards Updates (ASU). The franchise indicates that the adoption of these ASUs, including those not yet effective, is not anticipated to have a material effect on the company's financial position or results of operations. This statement provides some reassurance to prospective franchisees, suggesting that changes in accounting standards are not expected to significantly impact Pearce Bespoke's financial performance.
Specifically, the company adopted Accounting Standards Update (ASU) No. 2016-02, Leases, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. As a result of implementing ASU No. 2016-02, Pearce Bespoke recognized a right-of use asset and lease liability of $47,474 on its balance sheet as of December 31, 2023. The adoption did not result in a significant effect on amounts reported in the statement of operations and members' equity (deficiency) for the period ended December 31, 2023.
Furthermore, the FDD mentions ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326). Since Pearce Bespoke was incorporated January 22, 2023, Topic 326 did not result in any material adjustments to balance sheet accounts, net loss, or retained earnings (deficit).
While the franchisor believes these updates will not materially impact their finances, accounting standards can be complex. A prospective Pearce Bespoke franchisee may want to consult with a financial advisor to fully understand the implications of these accounting changes and how they might affect their individual franchise unit.