How are deferred tax assets and liabilities measured for Golden Krust Caribbean Restaurant?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company and its wholly owned subsidiaries are C corporations subject to federal, state, and local income taxes in the jurisdictions in which it files. These taxes and their effects have been provided for in the accompanying financial statements.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements' carrying amounts of existing assets and liabilities, and their respective tax base. Deferred tax assets and liabilities, as disclosed in Note 6, are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date. Deferred income tax expense represents the changes during the year in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.
The Company evaluated its tax positions and determined it has no uncertain tax positions as of December 31, 2023 and 2022.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 35)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, the company and its subsidiaries, being C corporations, are subject to federal, state, and local income taxes. These taxes are accounted for in the financial statements. Deferred tax assets and liabilities arise from differences between the carrying amounts of assets and liabilities in the financial statements and their tax bases.
These deferred tax assets and liabilities are measured using the enacted tax rates expected to be in effect when the temporary differences are recovered or settled. If there's a change in tax rates, the effect on these deferred tax items is recognized in the income for the year that includes the enactment date. Deferred income tax expense reflects the changes in deferred tax assets and liabilities during the year.
Furthermore, Golden Krust Caribbean Restaurant reduces deferred tax assets by a valuation allowance if it's more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2023 and 2022, the company has evaluated its tax positions and determined it has no uncertain tax positions.