This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

Heads Up — FASB provides a practical expedient for private-company franchisors on the identification of performance obligations under ASC 606

Published on: 29 Jan 2021

This Heads Up discusses the FASB’s recently issued Accounting Standards Update (ASU) No. 2021-02, Franchisors — Revenue From Contracts With Customers (Subtopic 952-606): Practical Expedient. The ASU allows a private-company franchisor (i.e., a franchisor that is not a public business entity) to use a practical expedient when identifying performance obligations in its contracts with customers (i.e., franchisees) under ASC 606. When using the practical expedient, a private-company franchisor that has entered into a franchise agreement would treat certain preopening services provided to its franchisee as distinct from the franchise license. The practical expedient is intended to reduce the cost and complexity of applying ASC 606 to preopening services associated with initial franchise fees.


Related Topics

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.