What standards are followed in the preparation of Del Taco's consolidated balance sheets?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
Basis of presentation — The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") and the rules and regulations of the Securities and Exchange Commission ("SEC").
Use of estimates — In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make certain assumptions and estimates that affect reported amounts of assets, liabilities, revenues, expenses and the disclosure of contingencies. In making these assumptions and estimates, management may from time to time seek advice and consider information provided by actuaries and other experts in a particular area. Actual amounts could differ materially from these estimates.
Allowance for credit losses — The Company closely monitors the financial condition of our franchisees and estimates the allowance for credit losses based on the lifetime expected loss on receivables. These estimates are based on historical collection experience with our franchisees as well as other factors, including current market conditions and events. Credit quality is monitored through the timing of payments compared to predefined aging criteria and known facts regarding the financial condition of the franchisee or customer.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the consolidated financial statements are prepared following U.S. Generally Accepted Accounting Principles (GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC). This means Del Taco adheres to a standardized framework for financial reporting, ensuring transparency and comparability for potential investors and franchisees. These principles cover various aspects of financial reporting, including revenue recognition, expense matching, and asset valuation.
Management is required to make certain assumptions and estimates that affect the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingencies. These estimates can include things like the allowance for credit losses, where Del Taco monitors the financial condition of franchisees and estimates potential losses based on historical collection experience, market conditions, and specific franchisee situations. Actual results could differ materially from these estimates.
Prospective franchisees should understand that while these standards provide a consistent framework, the use of estimates introduces a degree of subjectivity. Del Taco may seek advice from actuaries and other experts when making these assumptions. Franchisees should consider these accounting policies and estimates when reviewing Del Taco's financial statements, as they can impact the reported financial performance and position of the company.