How does Cicis offset accounts receivable?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
inancial instruments do not share risk characteristics, they are evaluated on an individual basis. The adoption of ASC 326 had no material impact on the Company's combined financial statements.
Consistent with ASC 326, the Company offsets accounts receivable with an allowance for credit losses. The allowance for credit losses is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable and is based on historical loss patterns, the number of days that billings are past due, and an evaluation of the potential risk of loss associated with specific accounts. Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Recoveries of accounts receivable previously written off are recorded when received. As of December 31, 2024 and 2023, the Company recorded an allowance for credit losses of $30,166 and $0, respectively.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, the company offsets accounts receivable using an allowance for credit losses. This allowance is Cicis's best estimate of potential credit losses within their existing accounts receivable. The estimate is determined by considering historical loss patterns, the length of time billings are past due, and an evaluation of potential loss risks associated with specific accounts. This approach is consistent with Accounting Standards Codification (ASC) 326.
Cicis determines the allowance for credit losses using the loss-rate approach and measures it on a collective basis when similar risk characteristics exist among the financial instruments. If financial instruments do not share similar risk characteristics, they are evaluated individually.
Account balances are charged against the allowance after all collection methods have been exhausted and the potential for recovery is considered remote. Any recoveries of accounts receivable that were previously written off are recorded when they are received. As of December 31, 2024, Cicis recorded an allowance for credit losses of $30,166, while the allowance was $0 as of December 31, 2023. Prior to adopting ASC 326, Cicis maintained an allowance for doubtful accounts, which was $0 as of December 31, 2022.