What was the allowance for credit losses for Coffee News at December 31, 2022?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
in above Sections 11.4 (a) and (b) depending upon the skill level and knowledge of the buyer or transferee.
12. LEGAL FEES ASSOCIATED WITH FRANCHISE.
| December 31, 2024, 2023 and 2022 | ||||
|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||
| ASSETS | ||||
| Current assets | ||||
| Cash | $ 64,135 | $ 66,796 | $ 94,422 | |
| Accounts receivable, net of reserve for current expected credit | ||||
| losses of $80,000 in 2024 and $120,000 in 2023 and 2022 | 26,049 | 38,558 | 23,979 | |
| Total current assets | 90,184 | 105,354 | 118,401 | |
| Other assets | ||||
| Investments | 84,419 | 104,477 | 102,181 | |
| Furniture and equipment, net | - | 31,865 | 38,977 | |
| Repurchased licenses | 17,500 | 17,500 | 17,500 | |
| Total |
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to Coffee News's 2025 Franchise Disclosure Document, the allowance for current expected credit losses was $120,000 in 2022. This figure is part of the assets listed on the balance sheets as of December 31, 2024, 2023, and 2022. The accounts receivable are reported net of this reserve.
For a prospective Coffee News franchisee, this indicates the level of caution Coffee News takes in accounting for potential uncollectible accounts. A higher allowance suggests Coffee News acknowledges a greater risk of not receiving payments from its franchisees or other debtors. This could be due to various factors, such as economic conditions or the financial stability of its franchisees.
It's important to note that the allowance for credit losses decreased to $80,000 in 2024, suggesting an improvement in the collectibility of accounts receivable or a change in accounting practices. Franchisees should consider these trends and inquire about the factors influencing these changes to better understand the financial health and risk management practices of Coffee News.