Why did Ledgers restate its financial statements during the year ended December 31, 2024?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
During the year ended December 31, 2023, the Company's financial statements included balances for a note receivable and deferred revenue for a franchise agreement that was terminated in 2023 but not properly written off in 2023. During the year ended December 31, 2024, the Company identified this error and restated its financial statements to properly recognize the termination of the franchise agreement recording $219,118 in bad debt expense for the year ended December 31, 2023 and removing the $752,118 note receivable, and $533,000 deferred revenue balances at December 31, 2023.
NOTE 9 - PRIOR PERIOD ADJUSTMENT (Continued)
The effect of these restatement is to decrease members' equity as of January 1 as follows:
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the company restated its financial statements for the year ended December 31, 2024, due to an error identified during that year. The error involved a franchise agreement that was terminated in 2023 but not properly written off at that time.
Specifically, Ledgers' financial statements for 2023 incorrectly included balances for a note receivable and deferred revenue related to the terminated franchise agreement. To correct this, the company restated its financials, recording $219,118 in bad debt expense for the year ended December 31, 2023. Additionally, they removed the $752,118 note receivable and $533,000 deferred revenue balances as of December 31, 2023.
The restatement ultimately decreased members' equity as of January 1. This correction ensures that Ledgers' financial statements accurately reflect its financial position and performance, providing a more reliable basis for decision-making. The independent auditor's report also mentions this restatement but states that their opinion on the financial statements is not modified as a result.