Using the 2009 Form 10-K for Wal-Mart in Appendix A, consider the following questions:
1. Find Wal-Mart’s financial statement note on “Income taxes.’’
a. Using the current tax information and the information given on income before income taxes, compute Wal-Mart’s fiscal 2008 effective tax rate for both U.S. and international income. The effective tax rate is computed by dividing current taxes by income before income taxes. Note: “Fiscal 2008” is the year ended January 31, 2009.
b. As of January 31, 2009, Wal-Mart had $4,311 million in deferred income tax liabilities. What was the source of most of this deferred tax liability?
2. Find Wal-Mart’s financial statement note concerning “share-based compensation plans.’’
a. Briefly describe Wal-Mart’s employee stock option plan.
b. Wal-Mart’s employee stock option plan allows employees to buy Wal-Mart stock at a fixed price in the future. If Wal-Mart’s stock price continues to rise, these options could be very valuable. Wal-Mart is required to estimate the value of these options and expense the value of these options as employee compensation. How much stock compensation expense did Wal-Mart recognize in the year ended January 31, 2009?