What was the net deferred tax liability for Chem Dry in 2021?
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 net deferred tax liability in 2021 was $(5,596). This figure represents the net amount of future tax obligations that Chem Dry has deferred to later years, after considering both deferred tax assets and deferred tax liabilities. A deferred tax liability arises when taxable income is higher than accounting income, meaning Chem Dry will likely pay more taxes in the future.
Deferred tax liabilities include items such as intangibles which amounted to $(10,160), property and equipment which amounted to $(308), prepaid expenses which amounted to $(165), and right-of-use asset which amounted to $(608). These figures represent future tax obligations related to these specific assets.
For a prospective Chem Dry franchisee, understanding these deferred tax implications is crucial for assessing the overall financial health and stability of the franchise. It's important to note that these figures are based on specific accounting methods and tax regulations, and can fluctuate based on changes in these factors. Reviewing these figures over several years, as presented in the table, provides a more comprehensive view of Chem Dry's tax position and its potential impact on future profitability.