What was the deferred income tax expense for 1-800-GOT-JUNK? for the period ended May 31, 2024?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
May 31 May 31
Cash provided by (used in):
Operating: Net income for the period
$ 288,999 $ 266,526 Items not involving cash: Amortization 9,288 20,952 Deferred income tax expense 59,707 32,952 Current income tax expense 25,716
Interest accrued for due to related parties 303,956 178,974 Bad debt
145,077
Source: Item 21 — Financial Statements (FDD page 56)
What This Means (2025 FDD)
According to 1-800-GOT-JUNK?'s 2025 Franchise Disclosure Document, the deferred income tax expense for the period ended May 31, 2024, was $32,952. This figure reflects the expense recognized on the income statement related to changes in deferred tax assets and liabilities. Deferred tax assets and liabilities arise from temporary differences between the book (financial reporting) and tax bases of assets and liabilities. These differences will result in taxable or deductible amounts in the future.
For a prospective 1-800-GOT-JUNK? franchisee, understanding deferred income tax is crucial for assessing the overall financial health and tax obligations of the franchisor. Deferred tax expenses can impact the net income reported by 1-800-GOT-JUNK?, which in turn affects various financial ratios and metrics used by investors and lenders. While this expense does not represent an immediate cash outflow, it indicates future tax liabilities that could affect the franchisor's long-term profitability.
It's important to note that deferred tax accounting can be complex and is influenced by changes in tax laws, accounting standards, and the specific financial circumstances of 1-800-GOT-JUNK?. Franchisees should consider this deferred tax expense as part of their broader due diligence, consulting with financial advisors to fully understand its implications. Reviewing several years of financial statements, including the notes, will provide a more comprehensive view of 1-800-GOT-JUNK?'s tax position and the trends in its deferred tax expenses.
In the context of franchise investing, consistent and predictable financial reporting is a positive sign. While deferred tax expenses can fluctuate, significant or unexplained changes should prompt further inquiry. Prospective franchisees should ask 1-800-GOT-JUNK? for additional details on the specific items that give rise to deferred tax assets and liabilities, as well as the assumptions used in estimating future taxable income. This information will help franchisees better assess the financial stability and tax planning strategies of the franchisor.