What accounting principles must Precision Door Service's financial statements adhere to?

According to the 2025 FDD, Precision Door Service prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. This requires the management of Precision Door Service to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities at the date of the consolidated financial statements. These estimates also impact the reported amounts of revenues and expenses during the reporting period.

Specifically, Precision Door Service must follow standards issued by the Financial Accounting Standards Board (FASB). For example, in December 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which requires disclosure of disaggregated information about a reporting entity's effective tax rate reconciliation as well as disclosures on income taxes paid by jurisdiction. In January 2024, the FASB issued ASU No. 2024-01, "Scope Application of Profits Interest and Similar Awards," which clarifies that profits interests and similar awards granted to employees as compensation for services are within the scope of ASC Topic 718 (Compensation—Stock Compensation).

These accounting principles and standards are crucial for ensuring the accuracy, reliability, and comparability of Precision Door Service's financial statements. Prospective franchisees should be aware that these standards can change over time, and Precision Door Service must adapt its accounting practices accordingly. Understanding that the actual results could differ from initial estimates is also important for franchisees when reviewing the financial statements.