On what is C12 Group's estimation of the allowance for credit losses based?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
Allowance for Expected Credit Losses: The Company recognizes an allowance for losses on accounts receivable in an amount equal to the current expected credit losses. The estimation of the allowance is based on an analysis of historical loss experience, current receivables aging, and management's assessment of current conditions and reasonable and supportable expectation of future conditions, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The Company assesses collectability by pooling receivables where similar characteristics exist and evaluates receivables individually when specific customer balances no longer share those risk characteristics and are considered at risk or uncollectible.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to C12 Group's 2025 Franchise Disclosure Document, the company recognizes an allowance for losses on accounts receivable equivalent to the current expected credit losses. The estimation of this allowance is based on several factors. These include an analysis of historical loss experience, the current aging of receivables, and the management's assessment of current conditions.
Management also considers reasonable and supportable expectations of future conditions when estimating the allowance for credit losses. Additionally, the company assesses specific identifiable customer accounts that are considered at risk or potentially uncollectible.
C12 Group assesses collectability by grouping receivables with similar characteristics and evaluates receivables individually when specific customer balances no longer share those risk characteristics and are considered at risk or uncollectible. The company does not have an allowance for credit losses at December 31, 2023 and 2022. Accounts receivable totaled $450,982 at January 1, 2022, the beginning of the earliest year presented.