Loss Carry-Forward Write-Off

When a Market Center has a Loss Carry-Forward balance and determines that they want to Profit Share for the month, the Market Center can choose to “write-off” the balance.

A NEW Market Center (less than 18 months) can only apply for an LCF write-off if the following has occurred:

1. Three months of consecutive profit
2. Strong Company Dollar projections
3. Strong cash flow
4. A KWRI Financial Statement Review

An ESTABLISHED Market Center that has been in business more than 18 months may also write-off the balance of the LCF Reinstatement at any time. This approval must be approved by the Region and KWRI.

When applying for a LCF write-off to your region, you must submit the following:

1.   LCF Write-off Form (obtain from your Region) signed by Operating Principal
2.   The Market Center Key Financial Metrics report
   • Click here to learn how to access and export the Market Center Key Financial Metrics report.

There are 3 options to implement a write-off, found in the Policies and Guidelines Manual:

1. Write off the entire LCF. This process eliminates the LCF in Transactions. The result is immediate profit sharing. The Operating Principal is aware that eventually the Market Center will break even. No entry is made for this in the AccountEdge/Lonewolf accounting software. This option maximizes the resulting Profit Sharing.
2. Convert the entire LCF to the KWRI LCF Allocation process. The Market Center eliminates the LCF in Transactions but chooses to write off a portion of the LCF every month via creating a Journal Entry in AccountEdge/Lonewolf until the Market Center breaks even. This monthly AccountEdge/Lonewolf Journal Entry must not exceed $2,000 per month.
3. Write off 25% of any month’s profit to the KWRI LCF Allocation process. The Market Center eliminates the LCF in Transactions, but chooses to write off 25% of the current month’s pre-profit sharing profit in AccountEdge/Lonewolf via a Journal Entry until the LCF is paid.
   • When a written approval is obtained to write off 25% of any month’s profit to the KWRI LCF Allocation process, instructions are sent by KWRI to the Market Center regarding the process that includes obtaining a spreadsheet template to track these adjustments.