Deferred tax liability
Need help with the attcahed questions with respect to the attached 10k.
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1. HP reports income tax expense of $699 million in its 2004 income statement and describes its income tax expense in Note 12 (pp. 121-124).
a. The company reports that it increased its valuation allowance for deferred tax assets by $47 million. What effect, if any, did this increase have on 2004 net income?
b. HP reports a deferred tax asset labeled "employee and retirement benefits." Briefly explain what caused this deferred tax asset to arise.
c. HP reports a deferred tax liability of $2.347 billion relating to "unremitted earnings of foreign subsidiaries."
i. Briefly explain how this liability arose.
ii. What effect, if any, does the recording of a deferred tax liability on unremitted earnings have on current profitability?
2. HP reports its investment in debt and equity securities in Note 8 (p.112). The company reports an unrecognized gain on equity securities in public companies of $40 million in 2004. By what amount, if any, did this unrecognized gain affect 2004 profit and why?
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https://brainmass.com/business/black-scholes-model/deferred-tax-liability-60279
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Need help with the attcahed questions with respect to the attached 10k.
---
1. HP reports income tax expense of $699 million in its 2004 income statement and describes its income tax expense in Note 12 (pp. 121-124).
a. The company reports that it increased its valuation ...
Solution Summary
This explains the concepts related to deferred tax liability by taking the example of HP
Deferred Tax Assets and Deferred Tax Liabilities
How are deferred tax assets and deferred tax liabilities derived? How do they relate to the difference between tax expense and taxes payable? How could an organization have a tax receivable? Why is the tax expense reported on the income statement comprised of current and deferred tax?
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