What creates deferred income taxes for Crepe De Licious?
Crepe_De_Licious Franchise · 2025 FDDAnswer from 2025 FDD Document
Deferred - The recognition of income and expenses in different periods for financial accounting and income tax purposes gives rise to timing difference that result in deferred income taxes.
Temporary differences that give rise to the net deferred income tax asset/liability consist primarily of credit loss expense, depreciation and lease expense, all of which are recognized differently for financial reporting and income tax purposes.
Source: Item 23 — RECEIPTS (FDD pages 57–233)
What This Means (2025 FDD)
According to Crepe De Licious's 2025 Franchise Disclosure Document, deferred income taxes arise from the recognition of income and expenses in different periods for financial accounting and income tax purposes. These differences in timing create what are known as timing differences, which then result in deferred income taxes.
Specifically, the temporary differences that lead to the net deferred income tax assets or liabilities for Crepe De Licious primarily consist of credit loss expense, depreciation, and lease expenses. The FDD states that these items are recognized differently for financial reporting compared to income tax purposes.
For a prospective franchisee, this information is relevant because it provides insight into the financial accounting practices of Crepe De Licious. Understanding how deferred income taxes are generated can help franchisees better interpret the company's financial statements and assess its overall financial health. It also highlights the importance of consulting with a qualified tax advisor to understand the implications of these accounting practices for their own business decisions.