What was the gross deferred tax liabilities related to intangibles for Chem Dry in 2023?
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 liabilities related to intangibles for 2023 was ($6,836). The document also provides the gross deferred tax liabilities related to intangibles for 2022 (as restated) and 2021, which were ($7,493) and ($10,160), respectively.
Deferred tax liabilities arise from temporary differences between the book value of assets and liabilities and their tax bases. In the case of intangibles, this often relates to how amortization or impairment is treated for accounting versus tax purposes. A higher deferred tax liability suggests that Chem Dry expects to pay more in taxes in the future due to these intangible assets.
For a prospective Chem Dry franchisee, understanding these deferred tax liabilities is crucial for assessing the overall financial health and tax obligations of the company. While the franchisee is not directly responsible for these liabilities, they reflect the financial strategies and tax planning of the franchisor, which can indirectly affect the franchise system's stability and resources.