At what value are marketable securities carried by Aunt Millies Bakeries?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity: The consolidated financial statements contain the accounts of Perfection Bakeries, Inc., Perfection Distribution LLC, Perfection Associates LLC, and First Capital Acceptance Corporation, (collectively, the "Company") which operate under common management and are of common ownership. Perfection Distribution LLC, Perfection Associates LLC, and First Capital Acceptance Corp., are all 100% wholly owned subsidiaries of Perfection Bakeries, Inc. Perfection Bakeries, Inc. produces and distributes various bread, bun and bakery products throughout the Midwest, predominantly in Indiana, Michigan, Illinois, Kentucky, Wisconsin, and Ohio. The Company also sells its product nationally and internationally through its Bakehouse division, which is the Company's frozen baked goods division, representing approximately 21% and 16% of the Company's total net sales for the years ended September 30, 2023 and 2022, respectively. Perfection Distribution LLC operates as the transportation distribution function for Perfection Bakeries, Inc. as a "carrier for hire" and results in maximizing savings related to sales and use tax. Perfection Associates LLC functions as an employee leasing company, which leases employees back to Perfection Bakeries, Inc. and Perfection Distribution LLC. First Capital Acceptance Corporation serves as the finance company for the routes that are sold to independent distributors (see Note 4).
All significant intercompany account balances and transactions have been eliminated in the consolidated financial statements.
Marketable Securities: Interest and dividends from marketable securities are included in income as earned. Realized gains (losses) on sales of marketable securities are determined using the specific identification method. Unrealized holding gains and losses on available for sale securities are excluded from earnings and are reported as a separate component of other comprehensive income until realized.
Marketable securities are exposed to various risks and rewards, such as interest rate, market, and credit risks. Due to these risks and rewards associated with certain marketable securities, it is possible that changes in the values of marketable securities may occur and that such changes could affect the amounts reported on the consolidated balance sheets. Securities with declines in fair value below amortized cost that are other than temporary are written down to fair value by a charge to earnings.
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, marketable securities are carried based on specific accounting policies. Interest and dividends earned from these securities are included in income as they are earned. When marketable securities are sold, the gains or losses realized are determined using the specific identification method. Unrealized gains and losses on securities available for sale are excluded from earnings and reported separately as part of other comprehensive income until they are realized.
These marketable securities are subject to risks such as interest rate, market, and credit risks. Changes in the value of these securities could affect the amounts reported on the consolidated balance sheets. If the fair value of a security falls below its amortized cost and this decline is considered other than temporary, the security is written down to its fair value, which results in a charge to earnings.
For a prospective franchisee, this means that Aunt Millies Bakeries' financial performance can be influenced by the performance of its marketable securities. The company's accounting policies aim to reflect these values accurately, but franchisees should be aware of the potential impact of market fluctuations on the company's financial statements.