Libby_7e_MBA_Companion_Solutions

0 350 350 state taxes net of federal impact 11 28 21

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Unformatted text preview: .1% 2.8% 2.1% Impact of foreign tax differential (16.9%) (13.8%) (11.7%) Tax credits (0.4%) (2.2%) (1.1%) Other 3.0% 5.6% 3.6% Effective income tax rate 21.8% 27.4% 27.9% Amazon reported tax expense on its 2009 income statement of $253 million. What did Amazon report as income before income taxes on its 2009 income statement? ANSWER $253 million / 21.8% = $1,160.55. Amazon reports $1,161 million on its income statement. LO 5 S E-8 Reporting deferred tax asset and deferred liabilities In 2009, Trek Bicycle Company reported the following information related to its deferred tax assets and deferred tax liabilities: Long-term deferred tax assets: Long-term deferred tax liabilities: Valuation allowance $17 million $16 million $ 2 million Will Trek report a long-term net deferred tax asset or a long-term net deferred tax liability on its 2009 balance sheet? ANSWER Trek will report a long-term net deferred tax liability of $1 million on its balance sheet. The valuation allowance is Trek’s estimate of the am...
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