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Case Overview: Part Two

From Kroger's 2011 Consolidated Balance Sheet determine:

  • How the deferred taxes are classified
  • What amounts are reported among current assets or liabilities and among non current assets and liabilities?

Case Overview: Part One

References

How Deferred Taxes are Classified

What amounts reported among current assets or liabilities and among concurrent assets and liabilities?

Deferred taxes are classified and reported under both current and long-term liabilities, but looking at the disclosure note that accompanies the statement, p.96, it shows that the totals reported under these two categories include current and long-term deferred assets as well.

"Connect." <i>Deferred Tax Assets</i>. N.p., n.d. Web. 7 Nov. 2013. &lt;http://connect.mcgraw-hill.com/sites/0077328787/student_view0/ebook/chapter16/chbody1/deferred_tax_assets.htm&gt;.

"Deferred Tax Liability." <i>Investopedia</i>. N.p., n.d. Web. 7 Nov. 2013. &lt;http://www.investopedia.com/terms/d/deferredtaxliability.asp&gt;.

"Tax rate." <i>Wikipedia</i>. Wikimedia Foundation, 31 Oct. 2013. Web. 7 Nov. 2013. &lt;http://en.wikipedia.org/wiki/Tax_rate&gt;.

Using Kroger Co.'s 2011 Income Statement determine :

  • The income tax expense
  • The current portion and deferred portion of the expense
  • Why is the income tax expense from the income statement different from the “provision for income taxes” in the disclosure notes?

Deferred Tax Assets & Liabilities

Income Tax Expense

Current and Deferred Portion of the Tax Expense

Why is the income tax expense from the income statement different from the “provision for income taxes” in the disclosure notes?

According to Kroger Co.’s 2011 Consolidated Statement of Operations (located on p. 84 of their Annual Report) the recorded income tax expense for the year is $247 million.

  • Reported as the same
  • United Federal Commercial Workers Union (UFCW)
  • Statutory Rate--legally imposed rate

Deferred tax assets are taxes to be saved in the future deductible amounts reduce taxable income when the temporary differences reverse.

Deferred tax liabilities are the result of temporary differences between the company's accounting and tax carrying values, the anticipated and enacted income tax rate, and estimated taxes payable for the current year.

A Little About Kroger Co.

  • Created by Barney Kroger in 1883
  • One of the largest retail food companies in the United States as measured by total annual sales.
  • It operates supermarkets, convenience stores, and manufactures and processes food that its supermarkets sell.

Like most corporations, Kroger has significant deferred tax assets and liabilities.

Kayla Rainey

Kroger Co.

Analysis Case 16-9

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