What is the auditor required to evaluate regarding the accounting policies used by Aira Fitness?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
ois for the purpose of offering franchise opportunities to entrepreneurs who want to own their own 'AIRA FITNESS' location, as a franchise.
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). As a result, the Company records revenue when earned and expenses when incurred. The Company has adopted the calendar year as its basis of reporting.
Use of Estimates
The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosures of contingent assets and liabilities and other items, as well as the reported revenues and expenses. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and any cash equivalents include all cash balances, and highly liquid investments with maturities of three months or less when purchased.
Franchisee Receivables
The Company's franchisee receivables primarily result from initial franchise fees, royalty fees, brand development contributions and training fees charged to franchisees. Timing of revenue recognition may be different from the timing of invoicing to customers.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
Based on the 2025 Aira Fitness Franchise Disclosure Document, the company's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). As a result, the company records revenue when earned and expenses when incurred and has adopted the calendar year as its basis of reporting.
In preparing these financial statements, Aira Fitness's management must make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent items, and reported revenues and expenses. Actual results could differ from these estimates.
The company's franchisee receivables primarily come from initial franchise fees, royalty fees, brand development contributions, and training fees charged to franchisees. The timing of revenue recognition may differ from the timing of invoicing to customers. Aira Fitness records accounts receivable when revenue is recognized before invoicing or unearned revenue when revenue is recognized after invoicing and reports these receivables at net realizable value.