Are federal and state income taxes included in the Crave Cookies financial statements?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
See accompanying notes and independent accountants' audit report
Notes to the Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies
Organization - Crave Cookies Franchising, LLC (the Company) formed on February 15, 2021 under the laws of the state of Utah as a Utah corporation.
The Company is a franchise company for Crave Cookies locations. The Company grants franchisees the right to operate a physical storefront location using the Crave Cookies name and marks.
Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Concentrations of Credit Risk - Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of receivables. In the normal course of business, the Company provides credit terms to its customers. Accordingly, the Company performs ongoing credit evaluations of its customers and maintains allowances for possible losses which, when realized, have been within the range of management's expectations.
The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk with respect to cash and cash equivalents. As of December 31, 2024 the Company did not have cash balances over the federally insured limit.
Cash and Cash Equivalents - For purposes of the statement of cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents.
Contract receivables - accounts receivable are stated at the amount of consideration from customers of which the Company has an unconditional right to receive. The Company provides an allowance for credit losses, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. As of December 31, 2024, there was no allowance for credit losses recorded.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 47)
What This Means (2025 FDD)
Based on the 2025 Crave Cookies FDD excerpts, there is no explicit mention of whether federal and state income taxes are included in the financial statements. The provided notes to the financial statements detail various accounting policies, such as revenue recognition, cash and cash equivalents, accounts receivable, inventories, related-party transactions, prepaid expenses, and property and equipment. They also discuss the use of estimates in preparing the financial statements and concentrations of credit risk.
Independent auditor's reports are included, which state that the financial statements present fairly the financial position of Crave Cookies Franchising, LLC in accordance with accounting principles generally accepted in the United States of America. These reports outline the responsibilities of both management and the auditors in preparing and auditing the financial statements, respectively.
However, the excerpts do not specify how income taxes are treated or whether they are included as part of the financial statements. A prospective franchisee should ask Crave Cookies for clarification on whether federal and state income taxes are included in the company's financial statements and request to see the specific line items related to income taxes in those statements.