What is the significance of Note 2 in All Team's financial statements?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
vertising expense for the years ended December 31, 2024 and 2023 were $2,771 and $446, respectively. For the years ended December 31, 2024 and 2023
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentrations of Credit Risk
The Company maintains demand deposits with a financial institution located in Tampa, Florida. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 in total. Uninsured balances aggregated $370,793 and $767,656 at December 31, 2024 and 2023, respectively.
Intangible Assets
Intangible assets are recorded at cost. Prior to December 31, 2002, amortization was on a straightline basis over 40 years. On January 1, 2002, the Company adopted Statement of Financial Accounting Standards (SFAS 142), which requires that intangibles with a definite useful life be amortized over that life. SFAS 142 is now referred to as Financial Accounting Standard Board Accounting Standards Codification (FASB ASC 360, Intangibles-Goodwill and Other) and requires that long-lived assets be evaluated to determine if the fair value of the asset exceeds the carrying value of the assets for the purposes of recognizing an impairment loss.
Fixed Assets
Fixed asse
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 33)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, Note 2 to the financial statements provides a summary of significant accounting policies. This note is important because it outlines the methods and assumptions All Team uses to prepare its financial statements. Understanding these policies is crucial for a prospective franchisee to accurately interpret All Team's financial performance and financial position.
Specifically, Note 2 addresses concentrations of credit risk, explaining that All Team maintains demand deposits with a financial institution in Tampa, Florida, insured by the FDIC up to $250,000. However, uninsured balances aggregated $370,793 and $767,656 at December 31, 2024 and 2023, respectively. This means that a portion of All Team's deposits exceeded the insured limit, exposing the company to potential losses if the financial institution were to fail.
Note 2 also describes the accounting treatment of intangible assets, fixed assets and leases. For intangible assets, it mentions the adoption of SFAS 142 (now FASB ASC 360) and the evaluation of long-lived assets for impairment. For fixed assets, it states that they are depreciated over their estimated useful lives using the straight-line method. These policies affect how All Team reports its assets and expenses, which in turn impacts its reported profitability and financial strength. A prospective franchisee should carefully review these policies to understand how they might affect All Team's financial results and to assess the company's financial health.