What does Carbones Pizzeria management need to do to prepare consolidated financial statements?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
Inc. (CPI), a Minnesota corporation. All material intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements as well as related disclosures. On an ongoing basis, the Company evaluates its estimates and assumptions based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.
Concentrations
The Company holds cash and cash equivalents at times may exceed federal insurance limits; however, the Company does not anticipate any losses related to this balance.
M & T PIZZA INCORPORATED AND SUBSIDIARIES Notes to Consolidated 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%
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the company's management is required to make estimates and assumptions that impact the reported amounts in the consolidated financial statements when preparing these statements in conformity with US GAAP (accounting principles generally accepted in the United States of America). These estimates and assumptions also affect related disclosures. The company must evaluate these estimates and assumptions on an ongoing basis, considering historical experience and other factors believed to be reasonable. Actual results could potentially differ from these estimates.
The consolidated financial statements should include M & T Pizza Incorporated (M&T), a Minnesota corporation, and its wholly-owned subsidiaries, Carbone & Sons, Inc. (C&S), a Minnesota corporation, and Carbone Pizza, Inc. (CPI), a Minnesota corporation. All material intercompany accounts and transactions must be eliminated during the consolidation process.
Management is also responsible for designing, implementing, and maintaining internal controls relevant to preparing and fairly presenting consolidated financial statements that are free from material misstatement, whether due to fraud or error. They must also evaluate whether conditions or events, considered in the aggregate, raise substantial doubt about the company's ability to continue as a going concern within one year after the date that the consolidated financial statements are available to be issued.