What was the change in accounts receivable from related parties for Carbones Pizzeria?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
Financial Statements For the Year Ended October 31, 2024**
2. Summary of Significant Accounting Policies (Continued)
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased with original maturities of three months or less to be cash equivalents. There were no cash equivalents at October 31, 2024.
Accounts Receivable and Allowance for Credit Losses
Accounts receivable for royalty fees from franchisees are due on or before the first day of each week for the sales during the preceding week and accounts receivable for advertising fee royalties from franchisees are due on or before Tuesday of each week for the sales during the preceding week. All receivables not received on time receive additional scrutiny from management and may be charged interest at rates up to 12% annually.
The Financial Accounting Standards Board ("FASB") issued guidance FASB Accounting Standards Codification ("ASC") 326 which changed how entities measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The most significant change in this standard is a shift from the incurred loss model to the expected loss model. Under the standard, disclosures are required to provide users of the financial statements with useful information in analyzing an entity's exposure to credit risk and the measurement of credit losses. Financial assets held by the Company that are subject to the guidance in FASB ASC 326 are trade accounts receivable. The impact of the adoption was not considered material to the financial statements and primarily resulted in enhanced disclosures only.
The Company's allowance for expected credit losses, is Management's best estimate of the amount of probable credit losses in its existing accounts receivable. The Company reviews its allowance for expected credit losses periodically. Management determines an allowance based on historical experience and then analyzes individual past due balances for collectability based on current conditions and reasonable and supportable forecasts.
In addition, if Management believes it is probable a receivable will not be recovered, i
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, information regarding the specific changes in accounts receivable from related parties for Carbones Pizzeria is not available. The provided excerpts from Item 22 discuss various accounting policies, including accounts receivable and allowance for credit losses, but do not provide the actual figures for accounts receivable from related parties. The notes to the consolidated financial statements for the years ended October 31, 2022, October 31, 2023, and October 31, 2024, outline the company's accounting practices, revenue recognition, advertising expenses, and income taxes. However, these sections do not detail the specific amounts of accounts receivable from related parties.
While the FDD excerpts detail how Carbones Pizzeria manages accounts receivable, including the assessment of credit losses and the policies for franchisee royalty and advertising fee payments, it does not disclose the specific values for receivables from related parties. The documents explain that receivables not received on time may be charged interest at rates up to 12% annually and that the company uses an expected loss model to account for credit losses on receivables. For the year ended October 31, 2024, the allowance for credit losses for accounts receivable amounted to $175,595.
To gain a comprehensive understanding of the financial transactions between Carbones Pizzeria and its related parties, a prospective franchisee should consider requesting additional information from the franchisor. Specifically, it would be prudent to ask for a detailed breakdown of all related party transactions, including the beginning and ending balances of accounts receivable from related parties for the past three fiscal years. This information is essential for assessing the financial health and potential risks associated with investing in a Carbones Pizzeria franchise.