What are the classifications Petro Stopping Center uses for its financial asset debt instruments?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company classifies its financial asset debt instruments as measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss. The classification depends on the business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Financial assets measured at amortized cost
Financial assets are classified as measured at amortized cost when they are held in a business model the objective of which is to collect contractual cash flows and the contractual cash flows represent solely payments of principal and interest. Such assets are carried at amortized cost using the effective interest method if the time value of money is significant. Gains and losses are recognized in profit or loss when the assets are derecognized or impaired and when interest income is recognized using the effective interest method. This category of financial assets includes trade and other receivables.
Financial assets measured at fair value through other comprehensive income
Financial assets are classified as measured at fair value through other comprehensive income when they are held in a business model the objective of which is both to collect contractual cash flows and sell the financial assets, and the contractual cash flows represent solely payments of principal and interest.
Financial assets measured at fair value through profit or loss
Financial assets are classified as measured at fair value through profit or loss when the asset does not meet the criteria to be measured at amortized cost or fair value through other comprehensive income. Such assets are carried on the balance sheet at fair value with gains or losses recognized in the income statement. Derivatives, other than those designated as effective hedging instruments, are included in this category.
Source: Item 23 — RECEIPTS **RECEIPTS (FDD pages 87–131)
What This Means (2025 FDD)
According to Petro Stopping Center's 2025 Franchise Disclosure Document, the company classifies its financial asset debt instruments into three categories. These classifications are based on the business model used for managing the assets and the contractual cash flow characteristics of the financial asset.
The first classification is "measured at amortized cost." Financial assets fall into this category when the objective of the business model is to collect contractual cash flows, and these cash flows represent solely payments of principal and interest. These assets are carried at amortized cost using the effective interest method if the time value of money is significant. Trade and other receivables are included in this category.
The second classification is "measured at fair value through other comprehensive income." Financial assets are classified into this category when the business model aims to both collect contractual cash flows and sell the financial assets, provided that the contractual cash flows represent solely payments of principal and interest.
The third classification is "measured at fair value through profit or loss." This classification is used when the asset does not meet the criteria to be measured at amortized cost or fair value through other comprehensive income. These assets are carried on the balance sheet at fair value, with any gains or losses recognized in the income statement. Derivatives, excluding those designated as effective hedging instruments, are included in this category.