Do the Big Apple Bagels financial statements include information about contingent liabilities?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 86)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, the financial statements do include information regarding contingent liabilities. Specifically, Note 2, "Summary of Significant Accounting Policies," addresses this.
The note explains that preparing financial statements requires management to make estimates and assumptions that could affect the reported amounts of assets and liabilities. This includes disclosing contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
For a prospective Big Apple Bagels franchisee, this means that the financial statements presented in the FDD involve some level of estimation and uncertainty. While the financial statements provide a picture of the company's financial health, there is a risk that actual outcomes could vary from the reported figures due to these estimates. It is common accounting practice to disclose contingent liabilities, providing transparency about potential future obligations that may arise.