The following tables were excerpted from Pepsico's 2012 Form 10-K. All amounts are in mil lions of dollars and the deferred tax asset and liability amounts are as of December 31 of the respective year.

1. Provide journal entries to record the income tax expense for 2010 through 2012. You may indicate the sum of the changes in the various deferred tax assets/liabilities by a single debit or credit to the Net deferred tax asset/liability account.
2. Refer to the deferred tax asset and liability items reported by Pepsico at December 31, 2012 and 2011. For each item (except Other), determine whether the balance changed because of a net originating or net reversing temporary difference. Provide a likely explanation for each of the temporary differences and clearly discuss whether it indicates a higher or lower financial reporting revenue or expense relative to the amount reported in the 2012 tax return.
3. Pepsico's reported deferred tax expense in 2012 ($86 million) does not equal the reported increase in net deferred tax liability ($4,323 2 $4,150 5 $173 million) over the course of 2012. What is the likely source of this discrepancy?

  • CreatedSeptember 10, 2014
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