What accounting principles does Dermani Medspa follow when preparing its financial statements?
Dermani_Medspa Franchise · 2025 FDDAnswer from 2025 FDD Document
The financial statements of the Company are presented using the accrual basis of accounting whereby revenues are recognized when they are earned, and expenses are recognized when they are incurred. The Company follows accounting principles generally accepted in the United States of America.
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.
The Company considers cash and cash equivalents to consist of cash at banks and all highly liquid investments with original maturities of three months or less. The Company maintains its cash balances at one bank, the total of which is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of December 31, 2024, the Company's cash balances were fully insured.
The Company holds system wide marketing fees collected in a restricted cash account. These amounts can only be spent on specified advertising related expenses as noted in the franchisee agreements.
Source: Item 23 — RECEIPTS (FDD pages 66–311)
What This Means (2025 FDD)
According to Dermani Medspa's 2025 Franchise Disclosure Document, the company adheres to specific accounting principles in preparing its financial statements. The financial statements are presented using the accrual basis of accounting, where revenues are recognized when earned, and expenses are recognized when incurred. Furthermore, Dermani Medspa follows accounting principles generally accepted in the United States of America.
In line with these principles, the management of Dermani Medspa is required to make estimates and assumptions that could affect the reported amounts of assets and liabilities, as well as the disclosure of contingent items at the date of the financial statements. These estimates also impact the reported amounts of revenues and expenses during the reporting period. However, the FDD notes that actual results could differ from these estimates.
Additionally, the company considers cash and cash equivalents to include cash at banks and highly liquid investments with original maturities of three months or less. Cash balances are maintained at one bank and are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Dermani Medspa also holds system-wide marketing fees collected in a restricted cash account, which can only be used for specified advertising-related expenses as outlined in the franchisee agreements.