Colgate-Palmolive reports the following income tax footnote disclosure in its \(10-\mathrm{K}\) report.

a. Colgate reports \(\$ 226.8\) million of deferred tax liabilities in 2007 relating to "Property." Explain how such liabilities arise

b. Describe how a deferred tax asset can arise from pension and other retiree benefit obligations.

c. Colgate reports \(\$ 210.8\) million in deferred tax assets for 2007 relating to tax loss and credit carryforwards. Describe how tax loss carryforwards arise and under what conditions the resulting deferred tax assets will be realized.

d. Colgate has established a deferred tax asset valuation allowance of \(\$ 10.8\) million for 2007 . What is the purpose of this allowance? How did the decrease in this allowance of \(\$ 114.6\) million from 2006 to 2007 affect net income?

c. Colgate's income statement reports income tax expense of \(\$ 759.1\) million. Assume that cash paid for income tax is \(\$ 731.8\) million and that taxes payable increased by \(\$ 101.2\) million. Use the financial statement effects template to record tax expense for 2007. (Hint: Show the effects of changes in deferred taxes.)

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Deferred Tax Balances at December 31 (in millions) 2007 2006 Deferred tax liabilities Intangible assets ..... $(432.3) $(380.9) Property, plant and equipment. (226.8) (233.4) Other.... (101.0) (150.5) (760.1) (764.8) Deferred tax assets Pension and other retiree benefits... 178.4 259.2 Tax loss and tax credit carryforwards 210.8 189.4 Accrued liabilities...... 97.8 77.3 Stock-based compensation. 63.5 57.1 Other.... Valuation allowance 81.3 94.2 (10.8) (125.4) 621.0 551.8 Net deferred income taxes... $(139.1) $(213.0)