Analyzing and Interpreting Tax Footnote (Financial Statement Effects Template) Under Armour, Inc. reports total tax expense of $154,112 thousands on its income statement for year ended December 31, 2015, and paid cash of $99,708 thousand for taxes. The tax footnote in the company's 10-K filing, reports the following deferred tax assets and liabilities information. 2015 2014 December 31 ($ thousands) Deferred tax assets Stock-based compensation Allowance for doubtful accounts and other reserves $40,406 $35,161 33.821 24.774 19.999 11.398 Accrued expenses Foreign net operating loss carryforward Deferred rent Inventory obsolescence reserves Tax basis inventory adjustment U.S. net operating loss carryforward Foreign tax credits State tax credits, net of foreign impact Deferred compensation Other Total deferred tax assets Less: valuation allowance Total net deferred tax assets Deferred tax liability Property, plant and equipment 19,600 16,302 13,991 11,005 11,956 8,198 10.019 5,845 9.217 4.733 6,151 5.131 4.966 4.245 2,080 1,858 6,346 4.592 178,552 133.242 (24.043) (15.550) 154.509 117,692 Intangible asset Prepaid expenses (31,069) (17,638) (22.820) (7.010) (8.766) (6.424) (627) (612) (63.282) (31,684) $91,227 $86,008 Other Total deferred tax liabilities Total deferred tax assets, net (a) Did Under Armour's deferred tax assets increase or decrease during the most recent fiscal year. By what amount? Under Armour's deferred tax assets increased by $ O * (thousands). Which of the following best summarizes our interpretation of an increase in a company's deferred tax assets for the most recent year? Deferred tax assets increased during the year, which means that the company paid more taxes than it reported as the tax expense on its income statement. Deferred tax assets generally arise when tax deductions are less than tax expense reported in the income statement. Because deferred tax assets increased, we can concluded that tax deductions were greater than tax expense. Deferred tax assets increased during the year, which means that the company's taxable income was less than in the prior year. Deferred tax assets increased during the year, which means that the company reported more as tax expense on its income statement than it paid in taxes. (b) Did Under Armour's deferred tax liabilities increase or decrease during the most recent fiscal year? Under Amour's deferred tax liabilities increased by SO * (thousands). What proportion of the foreign net operating losses does the company believe will likely expire unused? Round your answer to the nearest percent. O % (d) Explain how the valuation allowance affected 2015 net income. Under Amour's valuation allowance account increased during the year, which means net income increased. Under Amour's valuation allowance account decreased during the year, which means net income increased. Under Amour's valuation allowance account increased during the year, which means net income decreased. Under Amour's valuation allowance account decreased during the year, which means net income decreased. (e) Use the financial statement effects template to record Under Armour's income tax expense for the current fiscal year 2015 along with the changes in both deferred tax assets and liabilities. Assume that income taxes payable increased by $59,623 thousand. Use negative signs with answers, when appropriate. Balance Sheet Income Statement Cash Asset Earned Capital + Noncash Assets 0 Net Income = Liabilities Contributed Capital 0 + + Revenue - Transaction Record tax expense, part cash and part deferred Expenses = 0 X x 0 x 0 x 0 x Analyzing and Interpreting Tax Footnote (Financial Statement Effects Template) Under Armour, Inc. reports total tax expense of $154,112 thousands on its income statement for year ended December 31, 2015, and paid cash of $99,708 thousand for taxes. The tax footnote in the company's 10-K filing, reports the following deferred tax assets and liabilities information. 2015 2014 December 31 ($ thousands) Deferred tax assets Stock-based compensation Allowance for doubtful accounts and other reserves $40,406 $35,161 33.821 24.774 19.999 11.398 Accrued expenses Foreign net operating loss carryforward Deferred rent Inventory obsolescence reserves Tax basis inventory adjustment U.S. net operating loss carryforward Foreign tax credits State tax credits, net of foreign impact Deferred compensation Other Total deferred tax assets Less: valuation allowance Total net deferred tax assets Deferred tax liability Property, plant and equipment 19,600 16,302 13,991 11,005 11,956 8,198 10.019 5,845 9.217 4.733 6,151 5.131 4.966 4.245 2,080 1,858 6,346 4.592 178,552 133.242 (24.043) (15.550) 154.509 117,692 Intangible asset Prepaid expenses (31,069) (17,638) (22.820) (7.010) (8.766) (6.424) (627) (612) (63.282) (31,684) $91,227 $86,008 Other Total deferred tax liabilities Total deferred tax assets, net (a) Did Under Armour's deferred tax assets increase or decrease during the most recent fiscal year. By what amount? Under Armour's deferred tax assets increased by $ O * (thousands). Which of the following best summarizes our interpretation of an increase in a company's deferred tax assets for the most recent year? Deferred tax assets increased during the year, which means that the company paid more taxes than it reported as the tax expense on its income statement. Deferred tax assets generally arise when tax deductions are less than tax expense reported in the income statement. Because deferred tax assets increased, we can concluded that tax deductions were greater than tax expense. Deferred tax assets increased during the year, which means that the company's taxable income was less than in the prior year. Deferred tax assets increased during the year, which means that the company reported more as tax expense on its income statement than it paid in taxes. (b) Did Under Armour's deferred tax liabilities increase or decrease during the most recent fiscal year? Under Amour's deferred tax liabilities increased by SO * (thousands). What proportion of the foreign net operating losses does the company believe will likely expire unused? Round your answer to the nearest percent. O % (d) Explain how the valuation allowance affected 2015 net income. Under Amour's valuation allowance account increased during the year, which means net income increased. Under Amour's valuation allowance account decreased during the year, which means net income increased. Under Amour's valuation allowance account increased during the year, which means net income decreased. Under Amour's valuation allowance account decreased during the year, which means net income decreased. (e) Use the financial statement effects template to record Under Armour's income tax expense for the current fiscal year 2015 along with the changes in both deferred tax assets and liabilities. Assume that income taxes payable increased by $59,623 thousand. Use negative signs with answers, when appropriate. Balance Sheet Income Statement Cash Asset Earned Capital + Noncash Assets 0 Net Income = Liabilities Contributed Capital 0 + + Revenue - Transaction Record tax expense, part cash and part deferred Expenses = 0 X x 0 x 0 x 0 x