12. [Analysis of income tax footnote data] Exhibit 9P-1 con- lains the income tax footnote from the 2001 Annual Report of Honda [7267], a multinational automobile manufacturer based in Japan. Note that these data are prepared under U.S GAAP.

a. Calculate the differences (in yen) between Honda's income tax expense and that expense based on the statutory rate.

b. Using your answer to part

a. compute the impact on Honda's income tax expense over the 1999 to 2001 period of: (i) Changes in the valuation allowance (ii) Tax law changes (iii) Undistributed camings of subsidiaries

c. Lower non-Japanese tax rates reduced Honda's tax expense in each year, 1999 to 2001. (i) Discuss the trend in that reduction. (ii) Discuss the likely explanation for that trend

d. Discuss the factors that an analyst must consider when fore- casting Honda's effective tax rate for 2002.