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Gap Inc: deferred income taxes, valuation allowance:

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I need help with this please! Examine and analyze The Gaps financial statements and tax notes. Based on your analysis, create a 4 to 5 page report in Microsoft Word document that includes answers to the following questions:
How is the information related to the company's deferred income taxes presented?
Does the company have deferred tax assets and liabilities? If yes, summarize what they are related to.
Does the company have any valuation allowances? Why or why not.
Does the company have any operating loss carryforwards? Why?

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Solution Summary

The response provides you a structured explanation of deferred income taxes, valuation allowance, and operating loss carry-forwards of Gap Inc . It also gives you the relevant references.

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In compliance with BrainMass rules this is not a hand in ready assignment but is only guidance.

Deferred Income Tax:
The information related to deferred income tax is presented by Gap Inc in Note 12. Income Taxes, the components of income before income taxes are shown in a tabular form. In this section deferred income tax is shown under the heading "Deferred". The federal income tax, state income tax, and foreign income taxes are shown separately. The total deferred taxes for the year ended 2015 are $101 million, 2014 are $75 m and 2013 are $69m. These are included in provision for income tax. The presentation of the deferred income tax is in the form of a provision and in the breakup of the provision in Note 12, deferred income tax is listed for the last four years.

Deferred tax assets and liabilities: Gap has deferred tax assets. From the year 2015, Gap adopted Financial Accounting Standards Board Accounting Standard Update No. 2015-2017. According to Gap the adoption reduced current portion of deferred tax assets as a result of classifying all net deferred tax assets as noncurrent as of January 30, 2016. According to Gap it classified all net deferred tax assets as noncurrent as of January 30, 2016. The policy of Gap according to its annual report is that it records a valuation allowance against all its deferred tax assets when it is more likely than not that some or all of such deferred assets will not be realized. According to the annual report of Gap it has made the change in the reporting of deferred tax assets because FASB issued ASU No. 2015-17, Income Taxes in November 2015. According ...

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Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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