According to Itan's accounting policies, what is the treatment of cash equivalents?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ies - The Company follows the alternative accounting standard for private companies with respect to entities under common control. As such, entities under common control have not been evaluated under the guidance in the variable interest subsections of the Financial Accounting Standards Board ("FASB") ASC 810.
Fair value measurements - The Company follows accounting standards consistent with the FASB codification which defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements for all fi
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the company considers financial instruments with a fixed maturity date of less than three months to be cash equivalents. Itan holds its cash deposits at a regional bank. The balance in the account is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per bank as of December 31, 2024 and 2023.
As of December 31, 2024, Itan had $0 in excess of the FDIC limit, while on December 31, 2023, the company had $104,387 that were in excess of the FDIC limit. Itan's management believes that the company is not exposed to any significant credit risk with respect to its cash.
For a prospective Itan franchisee, this accounting policy indicates how Itan manages and reports its liquid assets. The policy of considering instruments with maturities under three months as cash equivalents is standard accounting practice. The disclosure of FDIC insurance and the amounts exceeding the limit provide transparency regarding the company's cash management and risk assessment. Franchisees may want to inquire about the specific regional bank used and the company's strategy for managing cash balances above the FDIC insurance limit to ensure the safety of funds.