How does Beehive Homes provide for probable uncollectible amounts in its accounts receivable?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
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, a
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, the company addresses potential uncollectible amounts from accounts receivable through a specific process. Beehive Homes' management assesses the current status of individual accounts to estimate probable uncollectible amounts. Based on this assessment, they establish a credit loss allowance.
If Beehive Homes deems certain outstanding balances uncollectible after reasonable collection efforts, these amounts are written off. This involves a charge to the credit loss allowance and a corresponding credit to the accounts receivable. This approach ensures that the balance sheet reflects a realistic valuation of what the company expects to collect.
As of December 31, 2024, and 2023, the balance of the allowance for credit losses was $0. However, in 2022, the allowance for credit losses was $90,000. This indicates that in 2022, Beehive Homes recognized a significant amount of receivables that were unlikely to be collected, while in the two subsequent years, they did not find it necessary to maintain such an allowance.