What accounting method does Learningrx use to compute current taxes?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
horized, issued, and outstanding | 50,000 | 50,000 | | |---|---|---|---| | Retained earnings | 942,514 | 773,206 | | | Total Stockholders' Equity | 992,514 | 823,206 | | | Total Liabilities and Stockholders' Equity | $ 1,433,773 | | $ 1,193,151 |
3. Income Taxes
Current taxes are computed using the cash basis of accounting. Current taxable net income (loss) prior to the use of net operating losses, was $235,000 and $14,689 for the years ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the Corporation has federal net operating losses (NOL) to be carried to future yea
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, the company computes its current taxes using the cash basis of accounting. For the years ended September 30, 2024 and 2023, the current taxable net income (loss) prior to the use of net operating losses was $235,000 and $14,689, respectively.
As of September 30, 2024, Learningrx had federal net operating losses (NOL) to be carried to future years of approximately $930,000 and $1,165,000 for the years ended September 30, 2024 and 2023, respectively. The document also states that deferred income taxes represent the future tax benefit to be reported using the accrual basis of accounting and the difference in methods of depreciation, in addition to NOL carry forwards.
For a prospective franchisee, this means that Learningrx's tax strategy involves using the cash basis for current tax calculations, while also accounting for deferred taxes and net operating losses that could impact future tax liabilities. Understanding the distinction between cash basis and accrual basis accounting is important for franchisees to properly manage their own finances and tax obligations, as Learningrx uses both methods for different purposes.