When recognizing revenues for Gokhale Method franchises, what must be satisfied?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
Basis of Presentation
This summary of significant accounting policies of the Company is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in United States of America ("U.S. GAAP") and have been consistently applied in the preparation of the financial statements.
Use of Estimates
Management of the Company has made certain estimates and assumptions relating to the reporting of assets, liabilities, results of operations, and the disclosure of contingent assets and liabilities to prepare these financial statements in accordance with accounting principles generally accepted in the United States of America. Actual results could differ from these estimates.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, the Company considers all highly liquid investments and investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on hand.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method FDD, the company's accounting policies conform to accounting principles generally accepted in the United States of America (U.S. GAAP). These principles are consistently applied when preparing the company's financial statements.
The FDD indicates that management must make certain estimates and assumptions when reporting assets, liabilities, results of operations, and the disclosure of contingent assets and liabilities. These estimates are necessary to prepare financial statements in accordance with U.S. GAAP. Actual results, however, could differ from these estimates.
Accounts receivable primarily consists of net royalty receivables from franchisees, teachers, or class fees collected by GME (Gokhale Method Enterprises, Inc.). The company uses the allowance method for doubtful accounts, based on management's review of past due accounts. As of December 31, 2022, management believed that all receivables were collectible after year end. This suggests that Gokhale Method carefully assesses the collectibility of its receivables to ensure accurate revenue recognition.