Under what condition does Kitchen Solvers recognize the revenue and expenses associated with the yearly convention?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
on long-term notes payable at December 31, 2024, including current maturities, are summarized as follows:
| Total | $ 25,157 |
|---|---|
| 2026 | 5,217 |
| 2025 | 19,940 |
Note 7 Deferred Revenue
Deferred revenue consists of payments received for the yearly convention to take place at a future date. Revenues and expenses for this convention are defe
Source: Item 21 — Financial Statements (FDD pages 48–49)
What This Means (2025 FDD)
According to Kitchen Solvers' 2025 Franchise Disclosure Document, the company defers revenue and expenses related to its yearly convention until the event occurs and the revenue is earned. This means that Kitchen Solvers does not recognize the payments received for the convention as revenue until the convention actually takes place. Similarly, the expenses associated with organizing and running the convention are not recorded until the event has happened.
For a prospective Kitchen Solvers franchisee, this accounting practice has implications for understanding the company's financial statements. The deferred revenue related to the yearly convention was $88,310 as of December 31, 2024, and $76,042 as of December 31, 2023. These figures represent payments received for future conventions that have not yet been recognized as revenue. The FDD states the deferred revenue was $0 for the year ended December 31, 2022.
This approach is a standard accounting practice to match revenues with the related expenses in the appropriate period. By deferring the recognition of revenue and expenses, Kitchen Solvers provides a more accurate picture of its financial performance in each accounting period. Franchisees reviewing the financial statements should be aware of this deferral and understand that the revenue and expenses associated with the convention will be recognized in the period when the event takes place.