How are inventories valued for Cornwell Quality Tools?
Cornwell_Quality_Tools Franchise · 2025 FDDAnswer from 2025 FDD Document
| Raw materials | $ | 5,749,223 | $ 5,882,360 | |----------------------------|-----------|------------|------------------| | Work in process | | 3,037,244 | 3,503,205 | | Finished goods | | 36,364,498 45,150,965 | 40,537,244 49,922,809 | | Less: Obsolescence reserve | | 613,052 | 392,256 | | | $ | 44,537,913 | $ 49,530,553 | The income tax effect has been provided on the increase/decrease in inventory value at the statutory federal and state tax rates. The tax effect increased the provision for income taxes by $540,500 in 2023 and $685,000 in 2022.
The Company uses the LIFO (last-in, first-out) method
Source: Item 23 — RECEIPT (FDD pages 101–373)
What This Means (2025 FDD)
According to Cornwell Quality Tools' 2025 Franchise Disclosure Document, the company uses the LIFO (last-in, first-out) method for valuing its inventories in its historical consolidated financial statements. This is because Cornwell Quality Tools believes it better matches costs and revenues.
Additionally, the FDD mentions that the income tax effect has been provided on the increase/decrease in inventory value at the statutory federal and state tax rates. For example, the tax effect increased the provision for income taxes by $540,500 in 2023 and $685,000 in 2022.
For additional analysis, the 2022 consolidated statements include information using the first-in, first-out (FIFO) method to value inventories. These statements and accompanying notes are presented for additional analysis and are not a required part of the consolidated financial statements.