Below are selected portions from Quaker Oats' tax footnote in its X6 annual report.
Provisions for income taxes on income before cumulative effect of accounting change were as follows:
Dollars in Millions Currently payable Federal Foreign State Total currently payable Deferred-net Federal Foreign State Total deferred-net Provision for income taxes X6 $99.410.226.6136.215.910.45.231.5$167.7 X5 $339.1131.754.9525.7(19.8)(7.3)(2.1)(29.2)$496.5 X4 $129.815.040.2185.0(42.2)(3.1)(12.4)(57.7)$127.3
The sources of pretax income before cumulative effect of accounting change were as follows:
Dollars in Millions U.S. sources Foreign sources Income before income taxes and cumulative effect of accounting change X6 $362.852.8$415.6 X5 $925.4295.1$1,220.5 X4 $302.218.2$320.4 The components of the deferred income tax provision (benefit) were as follows:
Dollars in Millions Accelerated tax depreciation Postretirement benefits Accrued expenses including restructuring charges Loss carryforwards Foreign gain deferral Other Provision (benefit) for deferredincome taxes X6 $3.70.640.6(7.1)9.8(16.1)$31.5 X5 $(23.8)(6.5)12.63.5−(15.0)$(29.2) X4 $8.8(6.0)(30.8)(6.1)−(23.6)$(57.7)
Deferred tax assets and deferred tax liabilities were as follows:
Dollars in Millions Depreciation and amortization Postretirement benefits Other benefit plans Accrued expenses including restructuring charges Loss carryforwards Other Subtotal Valuation allowance Total X6 Assets $56.9100.360.880.314.513.3326.1(14.2)$311.9 X5 Liabilities $400.1−9.27.9−33.2450.4−$450.4 Assets $58.8100.959.8147.913.515.9396.8(20.0)$376.8 Liabilities $405.6−20.210.4−22.8459.0−$459.0
Required:
1a. What was the effective tax rate on all income for fiscal X6?
1b. What was the effective tax rate on foreign income for fiscal X6?
2a. How much did Quaker Oats record in deferred taxes for fiscal X6? Was this an asset or liability?
2b. What was the major item contributing to the deferred tax for X6? Explain fully how this arose.
Cancer Cells
Abnormal cells that divide uncontrollably, can invade nearby tissues, and may spread to other parts of the body through the bloodstream and lymph system.
Lymphatic System
A network of vessels, nodes, and organs that helps to maintain the body's fluid balance and protect it from infections by filtering and moving lymph.
Monokines
Signaling molecules primarily released by monocytes, involved in inflammatory and immune responses.