What must the auditors evaluate regarding accounting policies used by Pump It Up?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
sists the franchisees in the start-up process and offers ongoing support.
Franchises operate under Pump It Up and BounceU. Active franchises at December 31, 2024, are as follows:
| Pump It Up | BounceU | |
|---|---|---|
| Franchised Locations: | ||
| Store Count as of December 31, 2023 | 46 | 11 |
| Store Openings During 2024 | - | - |
| Store Closings During 2024 | (4) | - |
| Store Count as of December 31, 2024 | 42 | 11 |
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the operations of FB Holdings, LLC and its wholly owned subsidiaries, Pump It Up Holdings, LLC; BounceU Holdings, LLC; Fun Brands, LLC; Fun Brands Tempe, LLC; and HQ Carousels, LLC. All material intercompany accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, the Company considers all highly liquid debt instruments purchased with original maturities of 90 days or less to be cash equivalents.
Concentrations and Credit Risk
The Company maintains checking and savings accounts with quality financial institutions. At times, cash balances may exceed the amount insured by the Federal Deposit Insurance Corporation.
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Allowances for Credit Losses and Accounts Receivable
Accounts receivable consists primarily of franchise royalty fees and receivables from franchised facilities. An allowance for doubtful accounts is determined based on management's evaluation of historical losses and the financial stability of its franchisees.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, the preparation of consolidated financial statements requires management to make estimates and assumptions. These estimates and assumptions impact the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. The auditors must evaluate these estimates and assumptions. The FDD notes that actual results could differ from these estimates.
Pump It Up's consolidated financial statements include the operations of FB Holdings, LLC and its wholly-owned subsidiaries, including Pump It Up Holdings, LLC. All material intercompany accounts and transactions are eliminated during consolidation. For cash flow statements, Pump It Up considers highly liquid debt instruments purchased with original maturities of 90 days or less to be cash equivalents.
Pump It Up maintains checking and savings accounts with quality financial institutions. Cash balances may exceed the amount insured by the Federal Deposit Insurance Corporation (FDIC). Accounts receivable primarily consist of franchise royalty fees and receivables from franchised facilities. An allowance for doubtful accounts is determined based on management's evaluation of historical losses and the financial stability of its franchisees. The company records accounts receivable and contract assets at their face amounts, less an allowance for credit losses. The allowance represents an estimate of expected credit losses based upon a specific review of all significant outstanding invoices. The allowance for estimated credit losses was approximately $172,387 and $180,801 at December 31, 2023 and 2022, respectively.