Consider the following income tax footnote information for Oracle for the fiscal year ended May 31,...
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Consider the following income tax footnote information for Oracle for the fiscal year ended May 31, 2019 (fiscal year 2019). The following is a geographical breakdown of income before the provision for income taxes: Year Ended May 31 (in millions) 2019 2018 2017 Domestic $3,397 $3,029 $3,307 Foreign 7,645 8,152 7,205 Income before provision for income taxes $11,042 $11,181 $10,512 The provision for income taxes consisted of the following: Year Ended May 31 ($ in millions) 2019 2018 2017 Current provision: Federal $881 $7,488 $842 State 270 238 231 Foreign 987 990 1,328 Total current provision $2,138 $8,716 $2,401 Deferred benefit: Federal $435 $(744) $(142) State (25) (23) (26) Foreign (1,481) (228) Total deferred benefit $(1,071) $(762) $(396) Total provision for income taxes $1,067 $7,954 $2,005 The provision for income taxes differed from the amount computed by applying the federal statutory rate to our income before provision for income taxes as follows: Year Ended May 31 ($ in millions) 2019 2018 2017 U.S federal statutory tax rate 21.0% 29.2% 35.0% Tax provision at statutory rate $2,318 $3,266 $3,679 Impact of the Tax Act of 2017: One-time transition tax (476) 7,003 Deferred tax effects 126 (820) Foreign earnings at other than United States rates (710) (896) (1,181) State tax expense, net of federal benefit 177 128 135 Settlements and releases from judicial decisions and statute expirations, net (119) (227) (170) Domestic production activity deduction (78) (107) Federal research and development credit (142) (157) (114) Stock-based compensation (181) (272) (134) Other, net 73 (103) Total provision for income taxes $1,066 $7,952 $2,005 The components of our deferred tax assets and liabilities were as follows: May 31 (in millions) 2019 2018 Deferred tax assets: Accruals and allowances $487 $510 Employee compensation and benefits 581 598 Differences in timing of revenue recognition 290 304 Basis of property, plant and equipment and intangible assets 1,114 Tax credit and net operating loss carryforwards 3,345 2,353 Total deferred tax assets 5,817 3,765 Valuation allowance (1,139) (1,177) Total deferred tax assets, net 4,678 2,588 Deferred tax liabilities: Unrealized gain on stock (70) (70) Acquired intangible assets (876) (1,129) GILTI deferred (1,364) Basis of property, plant and equipment an intangible assets (142) Other (180) (43) Total deferred tax liabilities (2,490) (1,384) Net deferred tax assets $2,188 $1,204 $ millions 2016 2017 Total deferred tax asset $5,577 $4,442 Valuation allowance 1,048 1,056 Required a. Use the four-year average valuation allowance to deferred tax assets (2016-2019) of 22.55% to adjust the income statement for each of the four years 2016-2019. Follow Analyst Adjustments 10.3 for guidance in the adjustment process. Note: Use a negative sign to indicate an income statement reversal. Note: Do not round until your final answer; round your final answers below to the nearest whole dollar. Income Statement Adjustments (S millions) 2016 2017 2018 2019 Incorme tax expense Net income b. Adjust the balance sheet for each of the four years 2016-2019. Note: Use a negative sign to indicate a decrease of the balance sheet accounts. Note: Round your answers to the nearest whole dollar. Balance Sheet Adjustments (S millions) 2016 2017 2018 2019 valuation allowance Deferred tax assets, net Total assets Retained Earnings Consider the following income tax footnote information for Oracle for the fiscal year ended May 31, 2019 (fiscal year 2019). The following is a geographical breakdown of income before the provision for income taxes: Year Ended May 31 (in millions) 2019 2018 2017 Domestic $3,397 $3,029 $3,307 Foreign 7,645 8,152 7,205 Income before provision for income taxes $11,042 $11,181 $10,512 The provision for income taxes consisted of the following: Year Ended May 31 ($ in millions) 2019 2018 2017 Current provision: Federal $881 $7,488 $842 State 270 238 231 Foreign 987 990 1,328 Total current provision $2,138 $8,716 $2,401 Deferred benefit: Federal $435 $(744) $(142) State (25) (23) (26) Foreign (1,481) (228) Total deferred benefit $(1,071) $(762) $(396) Total provision for income taxes $1,067 $7,954 $2,005 The provision for income taxes differed from the amount computed by applying the federal statutory rate to our income before provision for income taxes as follows: Year Ended May 31 ($ in millions) 2019 2018 2017 U.S federal statutory tax rate 21.0% 29.2% 35.0% Tax provision at statutory rate $2,318 $3,266 $3,679 Impact of the Tax Act of 2017: One-time transition tax (476) 7,003 Deferred tax effects 126 (820) Foreign earnings at other than United States rates (710) (896) (1,181) State tax expense, net of federal benefit 177 128 135 Settlements and releases from judicial decisions and statute expirations, net (119) (227) (170) Domestic production activity deduction (78) (107) Federal research and development credit (142) (157) (114) Stock-based compensation (181) (272) (134) Other, net 73 (103) Total provision for income taxes $1,066 $7,952 $2,005 The components of our deferred tax assets and liabilities were as follows: May 31 (in millions) 2019 2018 Deferred tax assets: Accruals and allowances $487 $510 Employee compensation and benefits 581 598 Differences in timing of revenue recognition 290 304 Basis of property, plant and equipment and intangible assets 1,114 Tax credit and net operating loss carryforwards 3,345 2,353 Total deferred tax assets 5,817 3,765 Valuation allowance (1,139) (1,177) Total deferred tax assets, net 4,678 2,588 Deferred tax liabilities: Unrealized gain on stock (70) (70) Acquired intangible assets (876) (1,129) GILTI deferred (1,364) Basis of property, plant and equipment an intangible assets (142) Other (180) (43) Total deferred tax liabilities (2,490) (1,384) Net deferred tax assets $2,188 $1,204 $ millions 2016 2017 Total deferred tax asset $5,577 $4,442 Valuation allowance 1,048 1,056 Required a. Use the four-year average valuation allowance to deferred tax assets (2016-2019) of 22.55% to adjust the income statement for each of the four years 2016-2019. Follow Analyst Adjustments 10.3 for guidance in the adjustment process. Note: Use a negative sign to indicate an income statement reversal. Note: Do not round until your final answer; round your final answers below to the nearest whole dollar. Income Statement Adjustments (S millions) 2016 2017 2018 2019 Incorme tax expense Net income b. Adjust the balance sheet for each of the four years 2016-2019. Note: Use a negative sign to indicate a decrease of the balance sheet accounts. Note: Round your answers to the nearest whole dollar. Balance Sheet Adjustments (S millions) 2016 2017 2018 2019 valuation allowance Deferred tax assets, net Total assets Retained Earnings
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Financial Markets and Institutions
ISBN: 978-0077861667
6th edition
Authors: Anthony Saunders , Marcia Cornett
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