How does Cornwell Quality Tools value its inventories?
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
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 Last-In, First-Out (LIFO) method for valuing its inventories in its historical consolidated financial statements. This is because Cornwell Quality Tools believes LIFO better matches costs and revenues.
The income tax effect related to the increase or decrease in inventory value is calculated at the statutory federal and state tax rates. In 2023, this tax effect increased the provision for income taxes by $540,500, and in 2022, it increased by $685,000.
For the years 2021 and 2022, the consolidated statements also present information using the First-In, First-Out (FIFO) method to value inventories for additional analysis. However, the company's primary method for its historical consolidated financial statements remains LIFO.