Where can I find more detailed information about Benihana's significant accounting estimates?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
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Recent Accounting Pronouncements
Refer to Note 2 of our consolidated financial statements for a detailed description of recent accounting pronouncements.
Critical Accounting Estimates
Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties may result in materially different amounts being reported under
Our significant accounting estimates are discussed in additional detail in Note 2 to our consolidated financial statements. We base our estimates on historical experience and various assumptions that we believe to be reasonable under the circumstances and we evaluate those estimates on an ongoing basis. Actual results may differ from these
estimates under different assumptions or conditions. We believe that our significant accounting estimates involve a higher degree of judgment and/or complexity for the reasons discussed below: Income Taxes
We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the respective tax bases of our assets and liabilities. Deferred tax assets and liabilities are measured using current enacted rates expected to apply to taxable income in the years in which we expect the temporary differences to reverse. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if, based on all available evidence, we determine that some portion of the tax benefit will not be realized.
In addition, our income tax returns are periodically audited by federal, state and foreign tax authorities. These audits include questions regarding our tax filing positions, including the timing and amount of deductions taken and the allocation of income amongst various tax jurisdictions. We evaluate our exposures associated with our various tax filing positions and record a related liability. We adjust our liability for unrecog
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, additional details regarding the company's significant accounting estimates can be found in Note 2 to their consolidated financial statements. Benihana bases these estimates on historical experience and various assumptions that they believe are reasonable, evaluating them on an ongoing basis. However, the document notes that actual results may differ from these estimates due to different assumptions or conditions.
Benihana believes that their significant accounting estimates involve a higher degree of judgment and complexity. One area requiring significant management judgment is income taxes, where deferred tax assets and liabilities are recognized based on differences between financial statement carrying amounts and tax bases. These are measured using current enacted rates expected to apply to taxable income in the years the temporary differences reverse. Benihana routinely evaluates the likelihood of realizing the benefit of their deferred tax assets and may record a valuation allowance if they determine that some portion of the tax benefit will not be realized.
As of December 31, 2023, Benihana had a valuation allowance of $0.6 million related to foreign tax credits they do not expect to utilize due to generating income in a jurisdiction with a higher income tax rate than the U.S. The recording of deferred taxes requires significant management judgment regarding the interpretation of applicable statutes, the status of various income tax audits, and Benihana's particular facts and circumstances. Prospective franchisees should carefully review Note 2 to understand the assumptions and potential impact of these estimates on Benihana's financial performance.