What accounting standard does Afuri Ramen Dumpling adhere to for going concern evaluations?

According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, the company adheres to specific accounting standards for evaluating its ability to continue as a going concern. The company follows the provisions outlined in the Financial Accounting Standards Board Accounting Standards Codification 205, subtopic 40. This standard extends the responsibility for performing the going concern evaluation to the management team, based on relevant conditions and events that are known and reasonably knowable when the financial statements are available to be issued.

In practical terms, this means that Afuri Ramen Dumpling's management is required to assess the company's ability to continue operating for at least one year from the date the financial statements are issued. This assessment considers all available information about the company's current and future financial health. For instance, in the 2024 FDD, management assessed the company's ability to continue as a going concern for the period of one year from April 8, 2022, and did not believe any existing conditions or events raised substantial doubt about the Company's ability to continue as a going concern.

For a prospective franchisee, this indicates that Afuri Ramen Dumpling's financial statements are prepared with a careful consideration of the company's long-term viability. It also suggests that management is proactive in identifying and addressing any potential risks to the company's continued operation. Franchisees should review these assessments and any related disclosures in the financial statements to gain a better understanding of the company's financial stability and its ability to support its franchisees in the long term.