When are liabilities for loss contingencies recorded by Body20's Company?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
Contingencies - The Company is subject to certain claims and lawsuits in the normal course of business. Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company is not aware of any litigation or claims that would have a material adverse effect on its financial condition or results of operations.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, the company records liabilities for loss contingencies when specific conditions are met. These conditions include situations arising from claims, assessments, litigation, fines, penalties, and other similar sources.
Specifically, Body20 will record these liabilities when it is probable that a liability has been incurred. In addition to the probability of the liability, the company must be able to reasonably estimate the amount of the assessment or remediation required to address the contingency.
The FDD also states that legal costs associated with these loss contingencies are expensed as they are incurred. As of the date of the financial statements, Body20 was not aware of any litigation or claims that would have a materially adverse effect on its financial condition or operational results.