How does Antioch Pizza Shop determine the allowance for doubtful receivables?
Antioch_Pizza_Shop Franchise · 2025 FDDAnswer from 2025 FDD Document
t the date of purchase. As of December 31, 2024, 2023, and 2022, the Company had cash and cash equivalents of $237,291, $75,685, and $126,781, respectively.
(e) Accounts Receivable
Accounts receivable are recorded for amounts due based on the terms of executed franchise agreements for royalty and marketing fees. These receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of outstanding amounts. When determining the allowance for doubtful receivable, the Company has adopted ASC 326, Financial Instruments—Credit Losses. This standard requires that management utilize the Current Expected Credit Losses ("CECL") model to recognize the appropriate allowance for doubtful receivables. This model requires entities to estimate and recognize expected credit losses over the life of the financial instrument. For trade receivables, management has elected to apply a simplified approach, based on historical loss experience and adjustments for current and forecasted economic conditions. Management regularly evaluates individual customer receivables, considering their financial condition, credit history and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded as income when received.
As of December 31, 2024, the Company had accounts rec
Source: Item 21 — Financial Statements (FDD page 56)
What This Means (2025 FDD)
According to Antioch Pizza Shop's 2025 Franchise Disclosure Document, the company records accounts receivable for royalty and marketing fees based on executed franchise agreements. These receivables are carried at the original invoice amount, with an estimate made for doubtful receivables based on a review of outstanding amounts.
To determine the allowance for doubtful receivables, Antioch Pizza Shop has adopted ASC 326, Financial Instruments—Credit Losses, utilizing the Current Expected Credit Losses (CECL) model. This model requires estimating and recognizing expected credit losses over the life of the financial instrument. For trade receivables, Antioch Pizza Shop applies a simplified approach based on historical loss experience, adjusted for current and forecasted economic conditions.
Management regularly evaluates individual customer receivables, considering their financial condition, credit history, and current economic conditions. Accounts receivable are written off when deemed uncollectible, and any recoveries of previously written-off accounts are recorded as income when received. As of December 31, 2024, Antioch Pizza Shop had accounts receivable of $22,400 but no allowance for doubtful accounts. Similarly, there were no accounts receivable or allowance for doubtful accounts as of December 31, 2023 and 2022.