What is Carbones Pizzeria management required to evaluate when preparing consolidated financial statements?
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 Carbones Pizzeria's 2025 Franchise Disclosure Document, when preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (US GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities. They must also disclose 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.
Specifically, Carbones Pizzeria management makes significant estimates regarding the allowance for doubtful accounts and the tax valuation allowance. These estimates are based on historical experience and various other factors considered reasonable under the circumstances.
This means that prospective Carbones Pizzeria franchisees should understand that the financial statements involve management's judgment and are not purely based on objective data. Actual results could differ from these estimates, which could impact the financial performance of the company and, by extension, the franchise system.