What was the change in contract assets for Crave Cookies in 2021?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
of Cash Flows
Year Ended December 31, 2022 and Period from February 15, 2021 (Inception) through December 31, 2021
| 2022 | 2021 | |||
|---|---|---|---|---|
| Operating Activities | 107 | 720 | ||
| Net loss | S | (84,420) | $ | (14,725) |
| Items not requiring (providing) cash | 100 | |||
| Depreciation | 4,584 | 400 | ||
| Non-cash operating lease expense | 8,042 | - | ||
| Changes in | ||||
| Accounts receivable | (17,607) | 50 m | ||
| Inventory | 14,319 | (21,515) | ||
| Prepaid expenses | (33,205) | |||
| Contract assets | 44,595 | (44,595) | ||
| Accounts payable and accrued expenses | 32, |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the company's contract assets decreased by $44,595 in 2021. This figure is derived from the statement of cash flows, which tracks changes in various asset and liability accounts.
Contract assets typically represent a company's right to receive consideration for goods or services that have been transferred to a customer when that right is conditional on something other than the passage of time. A decrease in contract assets could suggest that Crave Cookies collected more cash related to previously recognized revenue or that certain conditions related to those assets were not met, leading to a write-down.
For a prospective Crave Cookies franchisee, this information provides insight into the company's revenue recognition practices and how it manages its receivables. It's important to understand the nature of these contract assets and the conditions that trigger their recognition and collection. A significant decrease, as seen in 2021, warrants further investigation to ensure the company's accounting practices are sound and that revenue is being recognized appropriately.
While the statement of cash flows provides a snapshot of these changes, it does not offer detailed explanations. Therefore, a potential franchisee should seek clarification from Crave Cookies regarding the specific transactions that led to this decrease in contract assets and the company's expectations for future contract asset management.