How does Petro Stopping Center initially recognize financial assets?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
Financial assets are recognized initially at fair value, normally being the transaction price. In the case of financial assets not measured at fair value through profit or loss, directly attributable transaction costs are also included. The subsequent measurement of financial assets depends on their classification, as set out below. The Company derecognizes financial assets when the contractual rights to the cash flows expire or the rights to receive cash flows have been transferred to a third party and either substantially all of the risks and rewards of the asset have been transferred, or substantially all the risks and rewards of the asset have neither been retained nor transferred but control of the asset has been transferred. This includes the derecognition of receivables for which discounting arrangements are entered into.
Source: Item 23 — RECEIPTS **RECEIPTS (FDD pages 87–131)
What This Means (2025 FDD)
According to Petro Stopping Center's 2025 Franchise Disclosure Document, financial assets are initially recognized at fair value, which is typically the transaction price. For financial assets not measured at fair value through profit or loss, directly attributable transaction costs are included in the initial recognition. This means that when Petro Stopping Center acquires a financial asset, it records the asset on its books at the price agreed upon in the transaction.
The subsequent measurement of these financial assets depends on their classification. Petro Stopping Center classifies its financial asset debt instruments as measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss, based on the business model for managing the assets and the contractual cash flow characteristics.
Petro Stopping Center derecognizes financial assets when the contractual rights to the cash flows expire, or when the rights to receive cash flows are transferred to a third party, and substantially all risks and rewards of the asset are transferred. This also includes situations where risks and rewards are neither retained nor transferred, but control of the asset has been transferred. This includes the derecognition of receivables for which discounting arrangements are entered into.