What is the policy of Carbones Pizzeria regarding writing off accounts receivable?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
Additionally, the Company owned and operated one corporate location, Carbone's Pizzeria, during the year ended October 31, 2024.
2. Summary of Significant Accounting Policies
Fiscal Year
The Company's fiscal year is October 31.
Basis of Accounting and Consolidated Financial Statement Presentation
The Consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").
Principles of Consolidation
The consolidated financial statements 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 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
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for Carbones Pizzeria discusses accounts receivable and allowance for credit losses. While it doesn't explicitly detail the policy for writing off accounts receivable, it acknowledges that the preparation of financial statements requires management to make estimates and assumptions affecting reported amounts, including those related to accounts receivable. The document mentions that the company evaluates its estimates and assumptions based on historical experience and other factors. Actual results could differ from these estimates.
For the year ended October 31, 2022, the document states that significant estimates made by the Company are made by the Company the allowance for doubtful accounts and the tax valuation allowance. This suggests that Carbones Pizzeria considers the allowance for doubtful accounts as a critical estimate in their financial reporting. For the year ended October 31, 2023 and 2024, the document refers to 'Accounts Receivable and Allowance for Credit Losses' but does not provide further details in the provided excerpts.
Prospective franchisees should inquire with Carbones Pizzeria about the specific criteria and procedures used to determine when an account is deemed uncollectible and written off. Understanding this policy is crucial for managing financial expectations and ensuring accurate financial reporting for their franchise unit. It would be prudent to ask for historical data on write-off rates and the factors that influence these rates to better assess the potential risk associated with uncollectible accounts.