170 0 0 170 900 mdc example disclosure

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Unformatted text preview: gn Deferred taxes Federal State Foreign Provision for income taxes 730 0 0 730 2014 ? ? ? ? 170 0 0 170 ? ? ? ? 900 ? MDC Example Disclosure Continued Reconciliation of provision for income tax to the statutory rate of 40% is as follows: Statutory rate of 40% Non-tax-deduct. Ins. Prem. Tax-free interest income Investment tax credits Provision for taxes 2015 1000 20 ( 40 ) ( 80 ) 900 2014 ? 20 ? ? ? or, alternatively, Statutory rate Non-tax-deduct. Ins. Prem. Tax-free interest income Investment tax credits Effective tax rate 40.0 % .8 ( 1.6 ) ( 3.2 ) 36.0 % ?% ? ? ? ? Why is tax information useful? Explain why tax disclosure can help you answer the following questions. 1. Are overly optimistic assumptions being used for financial reporting purposes? 2. What are manager/auditor beliefs regarding the firm's ability to generate incomes in the near term? 3. What real assets (on or off the balance sheet) generate immediate cash flow implications for an acquirer? 4. Is the current tax payable for the period indicative of what one might expect for the future? 5. Is the growth in firm income coming from domestic or foreign operations? 6. What is the firm's capital investment strategy? Tax note Cheat Sheet – Table 1 One table essentially gives you the generic journal entry for recording taxes for the period. For example, assume a company called Winn Dixie had the following table for 2012. Current Deferred Total Amounts in thousands Federal State $ 119,006 8,785 (16,602) 371 102,404 9,156 $ 127,791 (16,231) 111,560 Therefore, the 2012 journal entry is: Income tax expense 111,560 D...
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This document was uploaded on 02/10/2014.

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