Question: Exhibit 12 24 presents information from the income tax note of

Exhibit 12.24 presents information from the income tax note of Dime Store, a discount retailer, for its fiscal years ending January 31, 2013, 2012, and 2011. Dime Store applies U.S. GAAP.
a. Present the journal entry to recognize Dime Store’s income tax expense and income taxes payable for the year ended January 31, 2011. Use a single deferred tax account instead of separate accounts for deferred tax assets and deferred tax liabilities.
b. Repeat part a for the year ended January 31, 2012.
c. Repeat part a for the year ended January 31, 2013.



d. Why do the amounts for deferred taxes in the entries in parts a, b, and c not equal the changes in deferred tax assets and deferred tax liabilities in Exhibit 12.24 for each year?
e. Why do state and local taxes appear as an addition in the reconciliation between the statutory tax rate and the effective tax rate?
f. What does the reporting of a deferred tax asset for health care benefits and a deferred tax liability for pensions suggest about the funding status of Dime Store’s health care and pension plans?
g. The deferred tax liability for property, plant, and equipment remained relatively steady between January 31, 2011, and January 31, 2012. What does this behavior of the deferred tax liability suggest about Dime Store’s expenditures on property, plant, and equipment?
h. What is the interpretation of the absence of a deferred tax asset valuationallowance?

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  • CreatedMarch 04, 2014
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