What is the standard used to evaluate the accounting estimates made by Carbones Pizzeria's management?

According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (US GAAP). When preparing these financial statements, the management of Carbones Pizzeria makes estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities. These estimates also impact the reported amounts of revenues and expenses during the reporting period.

Specifically, the significant estimates made by Carbones Pizzeria's management include the allowance for doubtful accounts and the tax valuation allowance. These estimates are crucial for presenting a fair view of the company's financial position. However, the FDD notes that actual results could differ from these estimates, indicating an inherent uncertainty in the reported financial figures.

Carbones Pizzeria evaluates its estimates and assumptions based on historical experience and various other factors that are believed to be reasonable under the circumstances. This ongoing evaluation process is essential to ensure that the financial statements reflect the most accurate and reliable information available at the time. Prospective franchisees should be aware that these estimates can impact the financial performance and stability of the company, and it is important to understand the basis and potential variability of these estimates when assessing the franchise opportunity.