Access the financial statements and related disclosure notes of Google Inc. from its website at investor.google.com. In Google's balance sheet, deferred income taxes in 2008 are reported as both an asset ($286,105 thousand) and a liability ($12,515 thousand).
1. Explain why deferred income taxes can be reported as both an asset and a liability. Why is the deferred tax asset reported as current and the deferred tax liability as long term in 2008? Is that also the situation in 2007?
2. Note 14 in the disclosure notes indicates that deferred tax assets are $650,634 thousand in 2008 and deferred tax liabilities are $377,044 thousand. How can that be explained in light of the two amounts reported in the balance sheet?
3. Does Google feel the need to record a valuation allowance for its deferred tax assets?