Question

LO3 E10-36. Analyzing and Interpreting Income Tax Disclosures The income tax footnote to the financial statements of FedEx Corporation follows. FedEx Corporation (FOX) The components of the provision for income taxes for the years ended May 31 were asfollows: MBC $ millions 2016 2015 2014 Current provision (benefit) Domestic Federal .... ..... $513 $ 795 $ 624 State and local ............. 72 102 56 Foreign.. .............. 200 214 194 785 1 874 Deferred provision (benefit) Domestic Federal *** 155 (474) 360 State and local.............. (18) (47) 82 Foreign... ... (2) (13)_ 135 (534) $920 $ 577 $1,334 18 a. What is the amount of income tax expense reported in FedEx's 2016, 2015, and 2014 income statements? b. What percentage of total tax expense is currently payable in each year! c. One possible reason for the $135 million deferred tax expense in 2016 is that deferred tax liabilities increased during that year. Provide an example that gives rise to an increase in the deferred tax liability

Answer 1

Answer to Question a)
Calculatoin for income tax expense reported in fedex' 2016,2015,2014 income staement
	2016	2015	2014
Current provision (benefits)	785	1111	874
Defferred Provision (Benefits)	135	-534	460
Total reported in income tax statement	920	577	1334

b) 100% of total tax expense is payable department each year.

c) In the United States, laws allow companies to maintain two separate sets of books for financial and tax purposes. Because the rules that govern financial and tax accounting differ, temporary differences arise between the two sets of books. This can result in deferred tax liability, when the amount of tax due according to tax accounting is lower than that according to financial accounting. Deferred tax liability commonly arises when in depreciating fixed assets, recognizing revenues and valuing inventories.