How does Bw Premier Collection assess whether a valuation allowance should be established?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company assesses whether a valuation allowance should be established based on its determination of whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Both positive and negative evidence is considered when determining the necessity of the valuation allowance as well as the sources of taxable income supporting the realization of the deferred tax assets, including taxable income in carryback years, future reversals of existing taxable temporary differences, tax-planning strategies and projected taxable income from future operations.
Source: Item 23 — Receipts (FDD pages 54–203)
What This Means (2025 FDD)
According to the 2025 FDD, Bw Premier Collection assesses the need for a valuation allowance by determining if it is more likely than not that some or all of the deferred tax assets will not be realized. This assessment involves considering both positive and negative evidence.
Factors considered include sources of taxable income that could support the realization of deferred tax assets. These sources encompass taxable income in prior carryback years, future reversals of existing taxable temporary differences, tax-planning strategies, and projections of taxable income from future operations.
By evaluating these factors, Bw Premier Collection determines whether a valuation allowance is necessary to reflect the portion of deferred tax assets that may not be realized in the future. This approach aligns with standard accounting practices for income taxes, ensuring that financial statements accurately represent the company's expected tax liabilities and assets.