In: Accounting
Homestake Mining Company is a 120-year-old international gold mining company with substantial gold mining operations and exploration in the United States, Canada, and Australia. At year-end, Homestake reported the following items related to income taxes (thousands of dollars).
Total current taxes |
$ 26,349 |
Total deferred taxes |
(39,436) |
Total income and mining taxes (the provision for taxes per its income statement) |
$(13,087) |
Deferred tax liabilities |
$303,050 |
Deferred tax assets, net of valuation allowance of $207,175 |
95,275 |
Net deferred tax liability |
$207,775 |
Note 6: The classification of deferred tax assets and liabilities is based on the related asset or liability creating the deferred tax. Deferred taxes not related to a specific asset or liability are classified based on the estimated period of reversal. |
|
Tax loss carryforwards (U.S., Canada, Australia, and Chile) |
$71,151 |
Tax credit carryforwards |
$12,007 |
Instructions
(a)
What is the significance of Homestake's disclosure of “Current taxes” of $26,349 and “Deferred taxes” of $(39,436)?
(b)
Explain the concept behind Homestake's disclosure of gross deferred tax liabilities (future taxable amounts) and gross deferred tax assets (future deductible amounts).
(c)
Homestake reported tax loss carryforwards of $71,151 and tax credit carryforwards of $12,007. How do the carryback and carryforward provisions affect the reporting of deferred tax assets and deferred tax liabilities?