The following public company demonstrates accounting change that our clients often face.

Error in accounting guidance application - Papa John's: Papa John's found some accounting errors that affected several years of financial statements in 2019. Below is an extract from there annual report.

Presentation of Financial Results

Immaterial Restatement of Previously Issued Consolidated Financial Statements to include the Papa John's Marketing Fund, Inc. ("PJMF")

During the first quarter of 2019, the Company reassessed the governance structure and operating procedures of PJMF, a nonstock corporation designed to operate at break-even for the purpose of designing and administering advertising and promotional programs for all participating domestic restaurants, and determined the Company has the power to control certain significant activities of PJMF, a variable interest entity ("VIE") in accordance with Accounting Standards Codification 810 ("ASC 810"),Consolidations. Therefore, the Company is the primary beneficiary of the VIE and per ASC 810 must consolidate PJMF. Prior to 2019, the Company did not consolidate PJMF. The Company has concluded the previous accounting policy to not consolidate was an immaterial error. The Company has corrected this immaterial error by restating the 2018 consolidated financial statements included herein to include PJMF. Fiscal 2017 was not restated as consolidating PJMF was not material to the results of operations. See "Note 2", "Note 5" and "Note 27" of "Notes to Consolidated Financial Statements", respectively, for additional information.

The Company restated the 2018 audited consolidated financial statements to reflect the correction of an immaterial error to consolidate the Papa John's Marketing Fund, Inc. See "Notes 2", "Note 5" and "Note 27" of "Notes to Consolidated Financial Statements" for additional information.

1. Please summarize the relevant GAAP guidance
2. Identify the financial statements that were impacted by the accounting change
3. Calculate the quantitative impact to the financials due to the accounting change

Answer rating: 100% (QA)

Summary of Relevant GAAP Guidance ASC 810 The relevant GAAP guidance in this case is Accounting Stan... View the full answer