Under Ben Jerrys' accounting methods, what method is used for income taxes?
Ben_Jerrys Franchise · 2025 FDDAnswer from 2025 FDD Document
| | Net Loss | - | - | - | (258) | (258) | | Balance, December 31, 2022 | 100 | 0 | 14,311 | 2,248 | 16,559 | | | | | | | | | Net Profit | - | - | - | 1,161 | 1,161 | | Balance, December 31, 2023 | 100 | $ 0 | $ 14,311 | $ 3,409 | $ 17,720 | | | | | | | | | See accompanying notes to consolidated financial statements | | | | | |
Consolidated Statements of Cash Flows
Years ended December 31, 2024 and 2023 (In thousands)
| BEN & JERRY'S FRANCHISING, INC. AND SUBSIDIARY | | | |---|---|---| | Consolidated Statements of Cash Flows | | | | (In Thousands) | | | | | 2023 | 2022 | | | | | | Cash flows from operating activities: | | | | Net profit (loss) from operations | 1,161 | (258) | | Adjustments to reconcile net profit (loss) to net | | | | cash provided by operating activities: | | | | Allowance for (recovery of) credit losses | 1 | (61) | | Depreciation and amortization | 152 | 152 | | Interest on financing lease | - | (1) | | Amortization of right of use asset, operating | 77 | 77 | | Amortization of right of use asset, financing | 36 | 37 | | Deferred income taxes | 225 | (67) | | Changes in operating assets and liabilities: | | | | Accounts receivable | (54) | (47) | | Inventories | (37) | 85 | | Prepaid expenses and other assets | (127) | 54 | | Due from parent, net | (4,826) | (3,112) | | Deposits | 4 | - | | Accounts payable | (136) | (145) | | Accrued liabilities | (414) | 140 | | Operating lease obligations | (76) | (73) | | Current tax liabilities | 165 | - | | Due to related party | 4,046 | 3,425 | | Deferred revenue | (74) | (145) | | Net cash provided by operating activities | 123 | 61 | | | | | | Cash flows from investing activities: | | | | Purchases of fixed assets | (8) | - | | Net cash used in investing activities | (8) | - | | | | | | Cash flows from financing activities: | | | | Payments on financing lease obligations | (36) | (35) | | Net cash used in financing activities | (36) | (35) | | Increase in cash | 78 | 26 | | | | | | Cash at beginning of year | 1,308 | 1,282 | | | | | | Cash at end of year | $ 1,386 | $ 1,308 | | | | | | See accompanying notes to consolidated financial statements | | | Notes to Consolidated Financial Statements
December 31, 2024 and 2023
(Dollars in Thousands)
(1) Description of Business, Basis of Presentation, and Summary of Significant Accounting Polic
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 89–133)
What This Means (2025 FDD)
According to Ben Jerrys's 2025 Franchise Disclosure Document, the company utilizes the accrual method for income taxes. This can be seen in the Consolidated Statements of Cash Flows, where "Deferred income taxes" are listed as an adjustment to reconcile net profit (loss) to net cash provided by operating activities. In 2023, the deferred income taxes amounted to $225,000, while in 2022, they were ($67,000).
Additionally, the Consolidated Statements of Operations show "Income tax (expense) benefit" as a separate line item before arriving at the net profit or loss. In 2023, Ben & Jerry's had an income tax expense of ($390,000), while in 2022, there was an income tax benefit of $67,000. This further indicates that income taxes are accounted for separately and impact the net profit or loss of the company.
Furthermore, the Balance Sheet includes line items for "Deferred tax assets" and "Current tax liabilities". As of March 31, 2025, Ben & Jerry's had deferred tax assets of $472,000 and current tax liabilities of $458,000. At the end of 2023, Ben & Jerry's had deferred tax assets of $276,000 and current tax liabilities of $165,000. These figures demonstrate that Ben & Jerry's recognizes and accounts for deferred and current tax liabilities and assets, which is characteristic of the accrual method of accounting for income taxes.