Has Coffee News provided an accrual for income taxes in its financial statements?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's policy is to prepare its financial statements on the income tax basis of accounting under which certain revenues and expenses are recognized in the determination of income in different reporting periods than they would be if the financial statements were prepared in accordance with generally accepted accounting principles. The tax basis differs primarily because the company has not provided an accrual for income taxes and has not adopted ASC 606 Revenue from Contracts with Customers. Accordingly, the accompanying financial statements are not intended to present financial position and results of operations under generally accepted accounting principles.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News FDD, the financial statements for 2703203 Manitoba, Ltd, which owns the worldwide trademarks and franchise rights for Coffee News, are prepared on the income tax basis of accounting. This means that certain revenues and expenses are recognized in different reporting periods compared to generally accepted accounting principles.
Specifically, Coffee News has not provided an accrual for income taxes. Additionally, they have not adopted ASC 606 Revenue from Contracts with Customers. Because of these differences, the financial statements are not intended to present the financial position and results of operations under generally accepted accounting principles.
For a prospective franchisee, this means that the financial statements may not reflect the complete financial picture of the company according to standard accounting practices. It is important to understand the implications of using the income tax basis of accounting when evaluating the financial performance of Coffee News.