Unformatted text preview: taxes during the
year. In general, these two numbers differ because Disney follows
Generally Accepted Accounting Principles for financial reporting
purposes, and the Internal Revenue Code for tax reporting
2. What is Disney’s 2009 statutory tax rate? What is its 2009 effective tax
rate? In general, why do these rates differ?
• Disney’s 2009 statutory tax rate is 35%, while its 2009 effective
(actual) tax rate is 36.2%. In general, these two numbers differ
because of permanent differences between financial reporting and
tax reporting. These permanent differences are listed in the
reconciliation table shown in Disney’s income tax footnote. Page 15 of 21 END-OF-CHAPTER MATERIAL
3. Why does Disney deduct a “valuation allowance” from its net deferred tax
liability in its income tax footnote?
• Valuation allowances are recorded against net deferred tax assets
when it is more likely than not that the asset will not be realized.
Many companies include the valuation allowance with the...
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- Spring '12
- Balance Sheet, Deferred tax, Generally Accepted Accounting Principles, Income tax in the United States