Does Itan's financial statement preparation involve the use of estimates and assumptions?
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 preparation of the company's financial statements requires management to make estimates and assumptions. 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, as many financial figures are not precisely determinable and require some level of judgment. For example, estimating the useful life of equipment for depreciation, or determining the allowance for doubtful accounts, both involve making assumptions about future events.
However, the FDD notes that actual results could differ from those estimates. This means there is a degree of uncertainty in Itan's reported financial figures. Prospective franchisees should be aware that these estimates could impact the financial performance of the company, and it is advisable to discuss these potential variations with a financial advisor.
Understanding the nature and extent of these estimates is crucial for any potential investor, as it provides insight into the level of subjectivity involved in the financial reporting and the potential for future adjustments.