How are deferred tax assets and liabilities measured at Petro Stopping Center?

According to Petro Stopping Center's 2025 Franchise Disclosure Document, deferred tax assets and liabilities are measured using specific tax rates expected to be in effect when the asset is realized or the liability is settled. These rates are based on tax laws that have been enacted or substantively enacted by the balance sheet date. It is important to note that deferred tax assets and liabilities are not discounted. This means their present value is not adjusted to reflect the time value of money.

Furthermore, Petro Stopping Center offsets deferred tax assets and liabilities only when a legally enforceable right exists to set off current tax assets against current tax liabilities. This offsetting is also contingent on the deferred tax assets and liabilities relating to income taxes levied by the same taxation authority. This applies whether the taxes are on the same taxable entity or different entities, provided there is an intention to settle the current tax assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

Prospective franchisees should understand that these measurements and offsetting practices can significantly impact the reported financial position of Petro Stopping Center. The use of enacted tax rates ensures that the deferred tax amounts reflect the most current legal environment, while the prohibition of discounting maintains a straightforward valuation. The offsetting rules provide clarity on when assets and liabilities can be netted against each other, affecting the overall presentation of tax-related items on the balance sheet.