What was the value of deferred tax assets for Carbones Pizzeria?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
e depreciation expense as well as changes in accruals.
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 | $ 34,000 |
|---|---|
| Change in accruals | 5,000 |
| Total deferred tax assets | 39,000 |
| Deferred tax liability: | |
| Property and equipment | (26,000) |
| Total deferred tax liability | (26,000) |
| Net deferred tax asset | $ 13,000 |
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 the 2025 FDD, Carbones Pizzeria's deferred tax assets are detailed in the consolidated financial statements. As of October 31, 2023, the total deferred tax assets amounted to $39,000, which includes an allowance for doubtful accounts of $34,000 and a change in accruals of $5,000. The deferred tax liability, primarily related to property and equipment, was ($26,000), resulting in a net deferred tax asset of $13,000.
For the year ended October 31, 2024, the total deferred tax assets increased to $63,000, comprising an allowance for doubtful accounts of $54,000 and a change in accruals of $9,000. The deferred tax liability, again related to property and equipment, was ($19,000), leading to a net deferred tax asset of $44,000.
These figures reflect the company's accounting for income taxes under the asset and liability method, which recognizes the future tax consequences of temporary differences between financial reporting and tax bases. A valuation allowance is recorded if it is more likely than not that some or all of the deferred tax assets will not be realized. Prospective franchisees should understand these deferred tax implications as they reflect the financial health and tax planning strategies of Carbones Pizzeria.