What accounting method does Aerus use for income taxes?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences, income tax credits, and net operating loss carryforwards. Temporary differences are primarily the result of the differences between the tax bases of assets and liabilities and their financial reporting amounts and net operating loss, carryforwards, and tax credits. Deferred tax assets and liabilities are measured by applying enacted statutory tax rates applicable to the future years in which deferred tax assets or liabilities are expected to be settled or realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense consists of the taxes payable for the current period and the change during the period in deferred tax assets and liabilities.
The Company follows ASC Topic 740, Income Taxes, relating to unrecognized tax benefits. The Company's income tax filings are subject to audit by taxing authorities. The Company's open audit periods are 2021-2024. In evaluating the Company's tax provisions and accruals, future taxable income, and the reversal of temporary differences, interpretations, and tax planning strategies are considered. The Company believes its estimates are appropriate based on current facts and circumstances.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to the 2025 FDD, Aerus uses the asset and liability method for accounting for income taxes. This approach involves recognizing deferred tax assets and liabilities for the estimated future tax consequences of temporary differences, income tax credits, and net operating loss carryforwards. These temporary differences arise primarily from the differences between the tax bases of assets and liabilities and their financial reporting amounts, as well as net operating loss carryforwards and tax credits.
Deferred tax assets and liabilities are measured using enacted statutory tax rates applicable to the years in which these assets or liabilities are expected to be settled or realized. Valuation allowances are established if necessary to reduce deferred tax assets to the amount expected to be realized. The income tax expense reported by Aerus consists of the taxes payable for the current period and the change during the period in deferred tax assets and liabilities.
Aerus follows ASC Topic 740, Income Taxes, regarding unrecognized tax benefits. The company's income tax filings are subject to audit by taxing authorities, with open audit periods spanning from 2021 to 2024. In evaluating tax provisions and accruals, Aerus considers future taxable income, the reversal of temporary differences, interpretations, and tax planning strategies. Aerus believes its estimates are appropriate based on current facts and circumstances.