Regarding Aira Fitness's financial statements, what is affected by the estimates and assumptions made by management?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to Aira Fitness's 2025 Franchise Disclosure Document, the estimates and assumptions that the company's management makes during the preparation of their financial statements can have a broad impact. These estimates and assumptions affect the reported amounts of assets and liabilities. This means that the value Aira Fitness places on what it owns (assets) and what it owes (liabilities) are subject to these estimations.
In addition, these estimates and assumptions also affect the disclosure of contingent assets and liabilities. Contingent assets and liabilities are potential assets or obligations that depend on the outcome of a future event. The reported revenues and expenses are also affected by these assumptions. Therefore, the income Aira Fitness reports earning, and the costs it reports incurring, are also subject to management's estimates.
Because the actual results could differ from those estimates, prospective franchisees should recognize that the financial statements provided are not definitive. Instead, they reflect management's best judgment at a particular point in time. It is important for potential franchisees to consider this when reviewing the financial statements and to possibly seek professional financial advice to fully understand the implications of these estimates.