How are eliminating entries handled in the consolidated statement of income (loss) and comprehensive income (loss) for City Wide Franchise Company, Inc. & Subsidiaries for the year ended December 31, 2024?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
nancial Statements December 31, 2024, 2023, and 2022**
Note 10. Subsequent Events
Subsequent events have been evaluated through March 20, 2025, which is the date the consolidated financial statements were available to be issued.
City Wide Franchise Company, Inc. & Subsidiaries Consolidating Schedule – Balance Sheet December 31, 2024
| City Wide Franchise Company, Inc. | City Wide Franchise of Canada, Inc. | City Wide Franchise International, Inc. | Eliminating Entries | 2024 Consolidated | |
|---|---|---|---|---|---|
| ASSETS | |||||
| Current Assets | |||||
| Cash and cash equivalents | $ 23,966,250 | $ 307,078 | $ - | $ - | $ 24,273,328 |
| Accounts receivable, net of allowance | |||||
| 2024 - $158,554, 2023 - $0, 2022 - $0 | 6,233,968 | 223,313 | - | (1,067,650) | 5,389,631 |
| Notes receivable, current maturities | 97,482 | - | - | - | 97,482 |
| Deferred franchise costs, current portion | 152,894 | 6,600 | - | - | 159,494 |
| Prepaid expenses | 961,105 | - | 7,076 | - | 968,181 |
| Inventory | 16,768 | - | - | - | 16,768 |
| Total current assets | 31,428,467 | 536,991 | 7,076 | (1,067,650) | 30,904,884 |
| Property and Equipment, net | 1,390,853 | - | - | - | 1,390,853 |
| Right-of-Use Asset - Operating Leases, net | 604,257 | - | - | - | 604,257 |
| Other Assets | |||||
| Notes receivable, less current maturities | 4,133,296 | - | - | - | 4,133,296 |
| Deferred franchise costs, net of current portion | 660,544 | 51,500 | - | - | 712,044 |
| Cash surrender value of life insurance | 1,742,041 | - | - | - | 1,742,041 |
| Total other assets | 6,535,881 | 51,500 | - | - | 6,587,381 |
| Total assets | $ 39,959,458 | $ 588,491 | $ 7,076 | $ (1,067,650) | $ 39,487,375 |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||
| Current Liabilities | |||||
| Accounts payable | $ 16,107,270 | $ 930,438 | $ 386,397 | $ (1,067,650) | $ 16,356,455 |
| Accrued expenses | 1,525,659 | - | 8,167 | - | 1,533,826 |
| Current portion of operating lease liabilities | 188,516 | - | - | - | 188,516 |
| Deferred franchise revenue, current | 705,734 | 35,190 | - | - | 740,924 |
| Other deferred income | 715,920 | - | - | - | 715,920 |
| Total current liabilities | 19,243,099 | 965,628 | 394,564 | (1,067,650) | 19,535,641 |
| Long-term Liabilities | 976,357 | - | - | - | 976,357 |
| Operating lease liabilities, less current portion | |||||
| Deferred franchise revenue, net of current portion | 3,471,058 | 245,475 | - | - | 3,716,533 |
| Deferred compensation | 895,020 | - | - | - | 895,020 |
| Accrued expenses, long-term | 276,776 | - | - | - | 276,776 |
| Refundable advance | 422,723 | - | - | - | 422,723 |
| Total long-term liabilities | 6,041,934 | 245,475 | - | - | 6,287,409 |
| Total liabilities | 25,285,033 | 1,211,103 | 394,564 | (1,067,650) | 25,823,050 |
| Stockholders' Equity (Deficit) | |||||
| Common stock | |||||
| Class A voting, $.01 par value; 300,000 shares | |||||
| authorized, 210,000 shares issued and outstanding | 2,100 | - | - | - | 2,100 |
| Class B nonvoting, $.01 par value; 30,000,000 shares | |||||
| authorized, 21,000,000 shares issued and |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the consolidated financial statements include the accounts of City Wide Franchise Company, Inc. and its wholly-owned subsidiaries, City Wide Franchise Company of Canada, Inc. and City Wide International Franchise Company. The document states that all significant intercompany accounts and transactions have been eliminated in consolidation. This means that any financial transactions (like revenue, expenses, or loans) between City Wide and its subsidiaries are removed from the consolidated financial statements to prevent double-counting and provide a clearer picture of the overall financial health of the entire organization.
For the year ended December 31, 2024, the impact of these eliminating entries can be seen in the consolidating schedule. For example, under current assets, the eliminating entries amount to a deduction of $1,067,650. Similarly, under current liabilities, the eliminating entries also amount to a deduction of $1,067,650. These deductions offset intercompany transactions, ensuring that the consolidated figures reflect only transactions with external parties.
This consolidation and elimination process is a standard accounting practice. By eliminating intercompany transactions, City Wide aims to present a transparent and accurate view of its financial performance and position to potential franchisees and other stakeholders. Franchisees can gain a better understanding of the overall financial stability of City Wide as a whole, rather than being misled by inflated figures that include internal transactions.