What does management estimate and assume when preparing consolidated financial statements for Carbones Pizzeria?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("US GAAP"), management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates made by the Company are made by the Company the allowance for doubtful accounts and the tax valuation allowance. Actual results could differ from those estimates.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to the 2025 FDD, Carbones Pizzeria's management is required to make estimates and assumptions when preparing consolidated financial statements in conformity with US GAAP (Generally Accepted Accounting Principles). These estimates and assumptions affect the reported amounts in the financial statements and related disclosures. The company evaluates these estimates and assumptions based on historical experience and other factors considered reasonable. However, the actual results could differ from these estimates.
Specifically, for the year ended October 31, 2022, the significant estimates made by the company included the allowance for doubtful accounts and the tax valuation allowance. These estimates are crucial for accurately representing the financial position of Carbones Pizzeria.
For a prospective franchisee, this means that the financial statements provided are based on management's best judgment but are not guarantees of future performance. It is important to understand that these estimates can impact the financial results and should be considered when evaluating the franchise opportunity. Franchisees should inquire about the specific estimates and assumptions used and how they might affect the financial outlook for their individual franchise.