What are some of the significant estimates that Deer Solution management uses when preparing the company's financial statements?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Deer Solution Franchising, LLC's ability to continue as a going concern within one year after the date that the financial statements are available to be issued.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit con
Source: Item 23 — RECEIPTS (FDD pages 55–246)
What This Means (2025 FDD)
According to Deer Solution's 2025 Franchise Disclosure Document, management is responsible for preparing financial statements in accordance with generally accepted accounting principles. In preparing these statements, Deer Solution's management must evaluate conditions or events that could raise substantial doubt about the company's ability to continue as a going concern within one year after the financial statements are issued. This involves making significant accounting estimates. The auditor's responsibility includes evaluating the reasonableness of these estimates.
Deer Solution collects funds from franchisees for brand-level advertising, marketing, and development, which is termed the Brand Development Fund. The fee is a percentage of gross sales less any sales tax, payable weekly. Accounts receivable, which primarily come from initial franchise fees, brand funds, management fees, and royalties, are carried at their estimated collectible amounts, net of allowances for doubtful accounts.
Deer Solution provides an allowance for doubtful collections based on a review of outstanding receivables, historical collection information, economic conditions, and other relevant factors. For the years ending December 31, 2024 and 2023, management determined that no allowance for doubtful accounts was necessary. This indicates that Deer Solution believed all accounts receivable were fully collectible during those periods.