Whose financial statements are included in this Benihana FDD?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company is party to claims in lawsuits incidental to its business, including lease disputes and employee-related matters. The Company has recorded accruals in its consolidated financial statements in accordance with ASC 450, Contingencies. While the resolution of a lawsuit, proceeding or claim may have an impact on the Company's financial results for the period in which it is resolved, in the opinion of management, the ultimate outcome of such matters and judgements in which the Company is currently involved, either individually or in the aggregate, will not have a material adverse effect on the Company's consolidated financial position or results of operations.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Long-Lived Asset Impairment — Refer to Note 2 to the financial statements
Critical Audit Matter Description
Long-lived assets, which includes property and equipment and right-of-use assets for operating leases, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying values of
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 72–73)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, Note 14 in Item 22 discusses commitments and contingencies related to the company's business, including potential lawsuits. Benihana has recorded accruals in its consolidated financial statements in accordance with accounting standards. Management believes that the outcome of these legal matters will not have a material adverse effect on the company's consolidated financial position or results of operations.
Item 22 also includes excerpts about the audit of Benihana's financial statements. The audits were conducted according to the standards of the Public Company Accounting Oversight Board (PCAOB). The goal of these audits is to provide reasonable assurance that the financial statements are free from material misstatement, whether due to error or fraud. The audit procedures include assessing the risks of material misstatement and examining evidence related to the amounts and disclosures in the financial statements.
These audits also involve evaluating the accounting principles used, significant estimates made by management, and the overall presentation of the financial statements. The auditor issues an opinion based on these procedures. Additionally, the auditor communicates any critical audit matters to the audit committee, which relate to material accounts or disclosures involving challenging, subjective, or complex judgments. One such matter identified is long-lived asset impairment, which includes property, equipment, and right-of-use assets for operating leases.