Gildan Activewear Inc. is a Canadian company that manufactures and sells activewear, socks, andunderwear. Manufacturing is primarily done in Honduras and Dominican Republic and sales are made worldwide.
Instructions
Through SEDAR (www.sedar.com) or Gildan’s website (www.gildan.com), obtain a copy of the company’s financial statements for its year ended October 4, 2009 (2009 year end), and answer the following questions.
(a) Review the Consolidated Statements of Earnings and Comprehensive Income for 2009 and 2008. What was the income tax expense for each year? Did the company apply intraperiod tax allocation in 2009 or 2008? Why or why not? How much does the company show as income taxes payable on the Balance Sheet for the fiscal year ends 2009 and 2008? What was paid for income taxes in 2009 and 2008, and where did you find this information? Why are the income taxes payable amounts and paid amounts significantly different for 2008 and 2009?
(b) What was the company’s effective tax rate for 2009? For 2008? What was the statutory rate in each of these years? What caused the differences? Be specific about whether the effective rate was increased or decreased as a result of each cause that you identify.
(c) For each future income tax account reported on the October 4, 2009 balance sheet, explain what underlies the balance that is reported. For each temporary difference, identify the balance sheet asset or liability where the tax basis and book value differ.
(d) What are the losses that the company has available to carry forward? When do these losses expire? How has the company accounted for these losses?