How does Best In Class Education Center measure deferred tax assets and liabilities?
Best_In_Class_Education_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company provides for income taxes utilizing the liability method recognizing taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the company's financial statements or tax returns. The deferred taxes represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period when the new rate is enacted.
Source: Item 23 — RECEIPT (FDD pages 47–204)
What This Means (2025 FDD)
According to Best In Class Education Center's 2025 Franchise Disclosure Document, the company uses the liability method for income taxes. This involves recognizing taxes payable or refundable for the current year, along with deferred tax liabilities and assets. These deferred items account for the future tax consequences of events already recognized in the company's financial statements or tax returns.
The deferred taxes specifically represent the future tax return consequences of differences that will either be deductible or taxable when the assets and liabilities are recovered or settled. Best In Class Education Center measures these deferred tax assets and liabilities using enacted tax rates that are in effect for the year in which the temporary differences are expected to be recovered or settled.
Furthermore, the FDD states that any change in tax rates will affect the deferred tax assets and liabilities. This effect is recognized in the period when the new tax rate is enacted. Prospective franchisees should understand that these accounting methods can impact the financial statements of Best In Class Education Center and, by extension, potentially affect their own franchise's financial performance.