What is the measurement methodology that Face Foundrie follows under ASC 740?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company follows the guidance under ASC 740, Accounting for Uncertainty in Income Taxes. ASC 740 prescribes a more-likely-than-not measurement methodology to reflect the financial statement impact of uncertain tax positions taken or expected to be taken in the tax return. If taxing authorities were to disallow any tax positions taken by the Company, the additional income taxes, if any, would be imposed on the member rather than the Company. Accordingly, there would be no effect on the Company's financial statements.
The Company's income tax returns are subject to examination by taxing authorities for a period of three years from the date they are filed. As of December 31, 2024, the 2023, 2022 and 2021 tax years were subject to examination.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 73)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, the company follows the guidance under ASC 740, Accounting for Uncertainty in Income Taxes. Specifically, Face Foundrie uses a "more-likely-than-not measurement methodology" when assessing the impact of uncertain tax positions on its financial statements. This approach is used to reflect the potential financial impact of tax positions that have been taken, or are expected to be taken, in the company's tax returns.
For a Face Foundrie franchisee, this means that the company is proactively addressing potential uncertainties related to income taxes. If taxing authorities were to disallow any tax positions taken by Face Foundrie, the FDD states that the additional income taxes, if any, would be imposed on the member rather than the company. Therefore, there would be no effect on the company's financial statements.
Furthermore, Face Foundrie's income tax returns are subject to examination by taxing authorities for a period of three years from the date they are filed. As of December 31, 2024, the 2023, 2022 and 2021 tax years were subject to examination.