According to Itan's accounting policies, what is the treatment of use of estimates?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
Use of estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the company's accounting policies require management to make estimates and assumptions when preparing financial statements in accordance with generally accepted accounting principles (GAAP). These estimates and assumptions can affect the reported amounts of assets and liabilities, as well as revenues and expenses, during the reporting period. This is a standard accounting practice.
In practical terms, this means that Itan's financial statements, which prospective franchisees may review, involve some level of estimation rather than precise measurement. These estimates might relate to things like the useful lives of assets (depreciation), potential bad debts, or future obligations. Franchisees should recognize that these estimates are management's best judgment at the time, but actual results could differ.
It is important to note that while the use of estimates is a normal part of financial reporting, it introduces an element of uncertainty. Prospective Itan franchisees should consider this when evaluating the company's financial performance and consult with their own financial advisors to understand the potential impact of these estimates. The auditor also evaluates the reasonableness of these estimates, as stated in the independent auditor's report.