How does Bw Premier Collection determine deferred taxes?
Bw_Premier_Collection Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company utilizes the liability method of accounting for income taxes whereby deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.
Recognition of deferred tax assets is limited to amounts considered by management to be more likely than not realized in future period.
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 Bw Premier Collection's 2025 Franchise Disclosure Document, the company uses the liability method for accounting for income taxes. This means that deferred taxes are calculated based on the differences between the financial statement and the tax basis of assets and liabilities. These calculations use the enacted tax rates that are expected to be in effect during the years when these differences reverse.
Bw Premier Collection limits the recognition of deferred tax assets to the amounts that management believes are more likely than not to be realized in future periods. The company also assesses whether a valuation allowance should be established. This assessment is based on whether it is more likely than not that some or all of the deferred tax assets will not be realized.
In determining the necessity of a valuation allowance, Bw Premier Collection considers both positive and negative evidence. This includes sources of taxable income that support the realization of deferred tax assets, such as taxable income in carryback years, future reversals of existing taxable temporary differences, tax-planning strategies, and projected taxable income from future operations. This approach is standard accounting practice, ensuring that deferred tax assets are only recognized to the extent they are expected to be realized.