What is the limitation on the recognition of deferred tax assets for Bw Premier Collection?

According to Bw Premier Collection's 2025 Franchise Disclosure Document, the recognition of deferred tax assets is limited to amounts that the company's management believes are more likely than not to be realized in future periods. This means that Bw Premier Collection only recognizes deferred tax assets if they are confident that the company will actually receive the future tax benefits associated with those assets.

Bw Premier Collection 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. This involves evaluating both positive and negative evidence, as well as the sources of taxable income that could support the realization of these assets. These sources include taxable income in carryback years, future reversals of existing taxable temporary differences, tax-planning strategies, and projected taxable income from future operations.

In simpler terms, Bw Premier Collection takes a conservative approach to recognizing deferred tax assets. They only recognize these assets if they have a reasonable expectation of realizing the future tax benefits. If there is significant uncertainty about whether the company will be able to use these assets, they will establish a valuation allowance to reduce the carrying value of the deferred tax assets on their balance sheet. This approach ensures that the company's financial statements accurately reflect its financial position and performance.