What does Itan's management do at the close of each period regarding accounts receivable?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
ancial assets and liabilities. The fair value measurements have no material financial effects on the Company's financial statements.
Cash - The Company considers financial instruments with a fixed maturity date of less than three months to be cash equivalent. The Company 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. The Company had $0 and $104,387 that were in excess of the FDIC limit as of December 31, 2024 and 2023, respectively. Management believes that the Company is not exposed to any significant credit risk with respect to its cash.
Accounts receivable - Accounts receivable consist mainly of monthly royalties and marketing funds due according to franchise agreements. Management assesses the collectability of accounts receivable at the close of each period and records an allowance for doubtful accounts based on specific identification. Management has determined all accounts to be collectible at December 31, 2024 and 2023.
Credit losses - The Company follows standards applicable to accounting for credit losses, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Itan's management assesses the collectability of accounts receivable at the close of each period. Accounts receivable primarily consist of monthly royalties and marketing funds that are due according to the franchise agreements. Based on this assessment, Itan records an allowance for doubtful accounts, which is determined through specific identification of potentially uncollectible amounts.
As of December 31, 2024, and December 31, 2023, Itan's management determined that all accounts were collectible. This means that Itan did not record any allowance for doubtful accounts during these periods.
Itan follows accounting standards applicable to credit losses, replacing the incurred loss methodology with the current expected credit loss (CECL) methodology. Although the CECL methodology applies to various types of receivables, including trading, financing, and repurchase agreements, Itan had no allowances for credit losses as of December 31, 2024, and 2023.