Alimentation Couche-Tard Inc., Loblaw Companies Limited, and Empire Company Limited are three companies in the same industry. Because all three are in the same industry, the expectation is that their operations and financial positions are also similar.
Instructions
Go to SEDAR (www.sedar.com) or the company websites and, using Alimentation Couche-Tard’s financial statements for the year ended April 26, 2009, Loblaw’s financial statements for the year ended January 2, 2010, and Empire’s financial statements for the year ended May 2, 2009, answer the following questions.
(a) Identify what industry all three companies are in.
(b) Identify all the areas where intraperiod tax allocation was used by the three companies. This requires a careful reading of some of the notes to the financial statements as well as the main statements themselves. Prepare a schedule of the total income tax provision (expense) or recovery (benefit) for each company, and identify where the provision or recovery was reported.
(c) Compare the three companies’ future income tax assets and/or future income tax liabilities, and identify, as much as possible, what temporary differences are responsible for these accounts. Would you expect companies in the same industry to have similar types of temporary differences? Do they?
(d) Would you expect the three companies to be subject to similar income tax legislation and tax rates? Are their statutory rates the same? Explain. Compare the companies’ statutory and effective rates and explain why there are differences, if there are any.