How does Atwell Suites recognize benefits resulting from uncertain tax positions?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company applies the provisions of ASC 740, Accounting for Uncertainty in Income Taxes, which prescribes criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits resulting from uncertain tax positions that meet a "more likely than not" threshold at the effective date are recognized, based on measurement as the largest benefit which has a greater than fifty percent likelihood of being sustained upon examination by the tax authorities.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites' 2025 Franchise Disclosure Document, the company adheres to ASC 740, Accounting for Uncertainty in Income Taxes, when dealing with uncertain tax positions. This accounting standard sets the criteria for how Atwell Suites recognizes and measures tax positions taken or expected to be taken on a tax return in its financial statements.
Specifically, Atwell Suites recognizes benefits from uncertain tax positions if they meet a "more likely than not" threshold at the effective date. This means that the company believes it is more likely than not (i.e., a greater than 50% chance) that the tax position will be upheld if examined by tax authorities. The recognized benefit is measured as the largest benefit that has a greater than fifty percent likelihood of being sustained upon examination by the tax authorities.
For a prospective Atwell Suites franchisee, this indicates that the company takes a measured and conservative approach to recognizing tax benefits, only doing so when there is a reasonable expectation of the position being upheld. This approach can provide some assurance that the financial statements accurately reflect the company's tax liabilities and assets, and that the company is not overly aggressive in its tax planning.