Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Chapter 2, Problem 1FIC
To determine
Identify the cause behind increase in valuation allowance between 2011 and 2012.
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Access the 2016 financial statements and related disclosure notes of Ford Motor Company from its
website at corporate.ford.com. Required: 1. In Note 21, find Ford's net deferred tax asset or liability. What
is that number? 2. Does Ford show a valuation allowance against deferred tax assets? If so, what is the
number, and what is Ford's explanation for it? 3-a. Does Ford have any NOL carryforwards? 3-b. What is
the amount of any carryforward, what deferred tax asset or liability is associated with it? (Round your
answer to 1 decimal place.) 3-c. What effective tax rate does that imply was used to calculate its deferred
tax effect?
Ivanhoe Property Management Company announced that in the year ended June 30, 2017, its earnings before taxes amounted to
$1,452,000. Calculate its taxes using Exhibit 3.6. (Round answers to 2 decimal places, e.g. 15,175.25.)
Exhibit 3.6 U.S. Federal Corporate Income Tax Rates for 2016
The federal corporate marginal tax rate varies from 15 to 39 percent. Generally speaking, smaller companies with lower taxable income have
lower tax rates than larger companies with higher taxable incomes. Smaller businesses are given preferential treatment to encourage new
business formation.
(1)
Corporations
Taxable Income
$0-$50,000
50,001-75,000
75,001-100,000
100.001-335.000
335.001-10,000,000
10,000,001-15,000,000
15.000,001-18,333.333
More than 18.333,333
Pay This Amount on
the Base of the
Bracket
S
0
7,500
13,750
22,250
113.900
3,400,000
5,150,000
6,416.667
(3)
Marginal Tax Rate:
Tax Rate on the Excess
Over the Base
15%
25
34
39
34
35
38
35
Average Tax Rate
at Top of Bracket
15.0%
18.3
22.3
34.0…
Analyzing and Interpreting Income Tax FootnoteBayerische Motoren Werke AG, commonly referred to as BMW, is a German multinational company that produces automobiles and motorcycles. The company was founded in 1916 as a manufacturer of aircraft engines, which it produced from 1917 until 1918 and again from 1933 to 1945. BMW includes the following footnotes in its 2018 annual report.Taxes on income of the BMW Group comprise the following:
in € million
2018
2017
Current tax expense
€ 2,220
€ 2,558
Deferred tax expense (+)/deferred tax income (–)
355
-558
thereof relating to temporary differences
641
-502
thereof relating to tax loss carryforwards and tax credits
-286
-56
Income taxes
€ 2,575
€ 2,000
The difference between the expected tax expense based on the underlying tax rate for Germany and actual tax expense is explained in the following reconciliation:
in € million
2018
2017
Profit before tax
€ 9,815
€ 10,675
Tax rate applicable in Germany
30.8%
30.7%…
Chapter 2 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 2 - Prob. 1QECh. 2 - Asset Valuation and Income Recognition. Asset...Ch. 2 - Trade-Offs among Acceptable Accounting...Ch. 2 - Income Flows versus Cash Flows. The text states,...Ch. 2 - Prob. 5QECh. 2 - Prob. 6QECh. 2 - Prob. 7QECh. 2 - Prob. 8QECh. 2 - Computation of Income Tax Expense. A firms income...Ch. 2 - Computation of Income Tax Expense. A firms income...
Ch. 2 - Costs to Be Included in Historical Cost Valuation....Ch. 2 - Effect of Valuation Method for Nonmonetary Asset...Ch. 2 - Prob. 13PCCh. 2 - Prob. 14PCCh. 2 - Prob. 15PCCh. 2 - Deferred Tax Assets. Components of the deferred...Ch. 2 - Interpreting Income Tax Disclosures. The financial...Ch. 2 - Interpreting Income Tax Disclosures. Prepaid Legal...Ch. 2 - Interpreting Income Tax Disclosures. The financial...Ch. 2 - Analyzing Transactions. Using the analytical...Ch. 2 - Prob. 21PCCh. 2 - Starbucks The financial statements of Starbucks...Ch. 2 - Prob. 1BICCh. 2 - Prob. 1CICCh. 2 - Prob. 1DICCh. 2 - Prob. 1EICCh. 2 - Prob. 1FICCh. 2 - Starbucks The financial statements of Starbucks...
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