What was the gross deferred tax assets for Chem Dry in 2023 (as restated)?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
to income before taxes is as follows:
| 2022 | |||||
|---|---|---|---|---|---|
| 2023 | (As Restated) | 2021 | |||
| Income tax (recovery) expense, computed at 21 | |||||
| percent of pretax income | $ | (9,416) $ | (830) $ | 873 | |
| Permanent differences | 9,568 | - | - | ||
| State income tax expense (recovery) | 168 | (42) | 257 | ||
| Other | 157 | (997) | 89 | ||
| Total provision for income taxes | $ | 477 | $ (1,869) $ | 1,219 |
The details of the net deferred tax liability are as follows:
| 2023 | (As Restated) | 2021 | |
|---|---|---|---|
| Deferred tax assets: | |||
| Allowance for credit losses | $ 531 | $ 941 | $ 1,312 |
| Deferred revenue | 1,259 | 1,759 | 2,365 |
| Notes receivable |
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the gross deferred tax assets for 2023 (as restated) were $5,240. This figure reflects the company's assessment of future tax benefits arising from various sources. These sources include allowance for credit losses, deferred revenue, notes receivable, interest limitation carryforward, accrued liabilities, lease liability, and other assets.
Deferred tax assets typically arise when there are differences between the accounting treatment and the tax treatment of certain items. For example, if Chem Dry recognizes revenue for accounting purposes in one period but defers it for tax purposes, this creates a deferred tax asset. Similarly, if expenses are deductible for tax purposes before they are recognized in the financial statements, this also results in a deferred tax asset.
For a prospective Chem Dry franchisee, understanding these figures is crucial for assessing the financial health and tax planning strategies of the company. While franchisees are not directly involved in managing these deferred tax assets, they reflect the overall financial management and profitability of Chem Dry, which can impact the resources and support available to franchisees. It is important to note that these are assets, meaning they represent potential future tax benefits for Chem Dry.
It is also important to consider these figures in the context of the deferred tax liabilities. In 2023, Chem Dry's gross deferred tax liabilities were ($8,241). The deferred tax liabilities primarily stem from intangibles, property and equipment, prepaid expenses, and right-of-use assets. The net deferred tax liability for Chem Dry in 2023 was ($3,001).