What is the title of ASU 2016-13, which addresses financial instruments and credit losses for Pearce Bespoke?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
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, ASU 2016-13 is titled Financial Instruments – Credit Losses (Topic 326). This accounting standards update aims to replace the existing method for assessing losses with one that considers expected credit losses. It requires a broader look at available information to estimate these losses.
Several additional Accounting Standards Updates (ASUs) have amended Topic 326, including 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.
For Pearce Bespoke, which was incorporated on January 22, 2023, Topic 326 did not lead to any significant changes in its balance sheet accounts, net loss, or retained earnings (deficit). This suggests that the company's financial reporting wasn't materially affected by the new standard during the periods examined in the financial statements.