What specific balance sheet accounts were affected by the adoption of ASU No. 2016-02 for Pearce Bespoke?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
e most significant change in the new leasing guidance is the requirement to recognize right-to-use (ROU) assets and lease liabilities for operating leases on the balance sheet.
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
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the adoption of ASU No. 2016-02, Leases, impacted Pearce Bespoke's balance sheet. Specifically, Pearce Bespoke recognized a right-of-use (ROU) asset and a lease liability on its balance sheet as of December 31, 2023. The value of both the ROU asset and the lease liability was $47,474.
This accounting standard update requires companies to recognize leases on the balance sheet, which was a significant change from previous guidance. For Pearce Bespoke, this meant recording the asset representing the right to use leased property and the corresponding liability for the obligation to make lease payments.
For a prospective Pearce Bespoke franchisee, this information is relevant because it demonstrates how Pearce Bespoke accounts for its leases. While the adoption of ASU No. 2016-02 did not significantly affect Pearce Bespoke's statement of operations or members' equity, it did change the presentation of its balance sheet. Franchisees reviewing Pearce Bespoke's financial statements should be aware of these changes and understand the implications of lease accounting on the company's financial position.
It's important to note that this adoption only affected the balance sheet by recognizing the right-of-use asset and lease liability. The statement of operations and members' equity were not significantly impacted, indicating that the underlying economics of Pearce Bespoke's leasing arrangements remained consistent.