What is the total deferred tax liability related to property and equipment for Carbones Pizzeria?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
The tax effects of temporary differences between financial statements and tax reporting give rise to deferred tax assets and deferred tax liabilities are presented below:
| Allowance for doubtful accounts | $ 54,000 |
|---|---|
| Change in accruals | 9,000 |
| Total deferred tax assets | 63,000 |
| Deferred tax liability: | |
| Property and equipment | (19,000) |
| Total deferred tax liability | (19,000) |
| Net deferred tax asset | $ 44,000 |
M & T PIZZA INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements
For the Year Ended October 31, 2024
5. Income Taxes (Continued)
The Company's provision for income taxes differs from applying the statutory U.S. federal income tax rate to income before income taxes.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the deferred tax liability related to property and equipment is detailed in the consolidated financial statements. However, the provided excerpts from Item 22 do not include the consolidated financial statements for the year ended February 28, 2025. Instead, the excerpts contain financial statements from prior years. The deferred tax liability related to property and equipment as of October 31, 2022, was ($19,000). The deferred tax liability related to property and equipment as of October 31, 2023, was ($26,000).
Deferred tax liabilities arise from temporary differences between the book value of assets and liabilities and their tax bases. In the case of property and equipment, this often results from differences in depreciation methods used for financial reporting and tax purposes. A deferred tax liability means that Carbones Pizzeria expects to pay more in taxes in the future due to these temporary differences.
Since the provided FDD excerpts do not contain the requested information for 2025, prospective franchisees should ask Carbones Pizzeria for the complete, audited financial statements for the relevant period. This will provide a clear picture of the company's deferred tax liabilities and overall financial health. It is essential to review these figures with a financial advisor to understand the potential impact on the franchisee's investment.