For All States M.E.D., what financial instruments' fair value approximates carrying value?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company follows ASC 820-10, "Fair Value Measurements". ASC 820-10 provides a definition of fair value, establishes a framework for measuring fair value under Generally Accepted Accounting Principles ("GAAP") and requires expanded disclosure about fair value measurements. The standard applies when GAAP requires or allows assets or liabilities to be measured at fair value and, therefore, does not expand the use of fair value in any new circumstance. The fair value of financial instruments to be classified as assets or liabilities including cash and trademarks approximate carrying value, principally because of the short maturity of those items.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, the company adheres to ASC 820-10, "Fair Value Measurements," which provides a definition of fair value and a framework for measuring it under Generally Accepted Accounting Principles (GAAP). This standard applies when GAAP requires or allows assets or liabilities to be measured at fair value.
For All States M.E.D., the financial instruments classified as assets or liabilities, including cash and trademarks, have a fair value that approximates their carrying value. This is mainly due to the short maturity of these items.
This indicates that the recorded value of these assets and liabilities is a reasonable estimate of their current market value. For a prospective franchisee, this suggests that All States M.E.D. maintains a conservative and transparent approach to valuing its assets and liabilities, which can be a sign of sound financial management.