Private company franchisors will be able to simplify their revenue recognition accounting under a standard issued by FASB on Thursday, Jan. 28.
The new Accounting Standards Update provides a practical expedient that simplifies how private company franchisors analyze certain activities when determining their performance obligations in a franchise agreement.
Under the new standard, franchisors can account for certain pre-opening services as distinct from the franchise license. FASB also provided an accounting policy election to recognize the pre-opening services as a single performance obligation. Read more.