What hierarchy does Beehive Homes use to assess fair value for its assets and liabilities?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
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Fair Value
The Company uses fair value for reporting financial assets and liabilities. A hierarchy for reporting the reliability of input measurements is used to assess fair value for all assets and liabilities. Fair value is defined as the selling price that would be received for an asset, or paid to transfer a liability, in the principal or most advantageous market on the measurement date. The hierarchy established prioritizes fair value measurements based on the types of inputs used in the valuation technique. Certain financial instruments are carried at cost on the balance sheet, which approximates fair value due to their short-term highly liquid nature.
Accounts Receivable
The Company has receivables for royalties and initial franchise set-up fees. Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to a credit loss allowance and a credit to receivables. The balance of the allowance for credit losses was $0, $0, and $90,000 at December 31, 2024, 2023, and 2022, respectively.
Property and Equipment
Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which range from three to fifteen years.
Use of Estimates
Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, the company uses a hierarchy for reporting the reliability of input measurements to assess the fair value of its financial assets and liabilities. Fair value is defined as the selling price that would be received for an asset, or the amount paid to transfer a liability, in the principal or most advantageous market on the measurement date. The hierarchy prioritizes fair value measurements based on the types of inputs used in the valuation technique.
For accounts receivable, which include royalties and initial franchise set-up fees, Beehive Homes states these at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts based on their assessment of individual accounts. Balances that remain outstanding after reasonable collection efforts are written off through a charge to a credit loss allowance. The balance of the allowance for credit losses was $0 at December 31, 2024 and 2023, and $90,000 at December 31, 2022.
For property and equipment, Beehive Homes states these at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, ranging from three to fifteen years. Management also uses estimates and assumptions in preparing financial statements, which can affect the reported amounts of assets and liabilities, the disclosure of contingent items, and reported revenues and expenses. Actual results could differ from these estimates. Certain financial instruments are carried at cost on the balance sheet, which approximates fair value due to their short-term highly liquid nature.