Question

In: Accounting

Homestake Mining Company is a 120-year-old international gold mining company with substantial gold mining operations and...

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?

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