Interpreting income tax disclosures. Exhibit 10.10 presents data from the income tax note for Sun Microsystems for Year 5, Year 6, and Year 7 (amounts in millions). No changes occurred in the income tax rates applicable to Years 5 through 7 or to future years.

a. Give the journal entry to record income tax expense for Year 5. You may combine federal, foreign, state, and local taxes.

b. Was book income before income taxes larger or smaller than taxable income for Year 5? Explain.

c. Repeat part a for Year 6 .

d. Repeat part b for Year 6.

e. Repeat part a for Year 7.

f. Repeat part b for Year 7 .
g. What was the likely direction of change in expenditures on depreciable assets between Year 6 and Year 7? Explain.

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DEERE & COMPANY EXHIBIT 10.9 Income Tax Disclosures (all dollar amounts in millions) (Problem 45) Income before Income Taxes Income Tax Expense Current Deferred Total... Income Taxes on Income before Income Taxes at the Statutory Tax Rate of 35% Tax-Exempt Interest Foreign Tax Rates. Income Tax Expense (credit) COMPONENTS OF DEFERRED TAXES Year 10 Year 11 $588 $ (26) $124 58 $182 $ 95 (100) $ (5) $206 $ (9) (30) (3) 6 7 $182 $ (5) September 30 Year 9 Year 10 Year 11 Deferred Tax Assets Uncollectible Accounts $ 36 $ 44 $ 70 Sales Rebates and Allowances 22 37 58 Pensions 41 35 44 Valuation Allowance (22) (34) (23) Net Deferred Tax Assets $ 77 $ 82 $149 Deferred Tax Liabilities Installment Sales Receivable $128 $167 $127 Depreciable Assets 186 208 215 Deferred Tax Liability $312 $375 $342