Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1-a. How much did Disney report as income tax expense in fiscal 2016? (Enter your answer in millions.) 1-b. How much cash did Disney pay
1-a. How much did Disney report as income tax expense in fiscal 2016? (Enter your answer in millions.)
1-b. How much cash did Disney pay during the year for income taxes? (Enter your answer in millions.)
2-a. What is Disneys 2016 statutory tax rate?
2-b. What is its 2016 effective tax rate? (Enter your answer as a percentage rounded to 1 decimal place (i.e. 0.123 should be entered as 12.3).)
The following questions pertain to Disney's 2016 financial statements and income taxes footnote shown below. DISNEY'S 2016 FINANCIAL STATEMENTS Consolidated Statements of Income (in millions, except per share data) 2016 2015 2014 $ 47,130 8,502 55,632 $ 43,894 8,571 52,465 $ 40, 246 8,567 48,813 (24,653) (23, 191) (21,356) (5,340) (8,754) (2,527) (41,274) (156) (5,173) (8,523) (2,354) (39,241) (53) Revenues : Services Products Total revenues Costs and expenses: Cost of services (exclusive of depreciation and amortization) Cost of products (exclusive of depreciation and amortization) Selling, general, administrative and other Depreciation and amortization Total costs and expenses Restructuring and impairment charges Other expense, net Interest income)(expense), net Equity in the income of investees Income before income taxes Income taxes Net income Less: Net income attributable to noncontrolling interests Net income attributable to The Walt Disney Company (Disney) Earnings per share attributable to Disney: Diluted Basic Weighted average number of common and common equivalent shares outstanding: Diluted (5,064) (8,565) (2,288) (37,273) (140) (31) 23 854 12,246 (4,242) 8,004 (503) (260) 926 14,868 (5,078) 9,790 (399) 9,391 (117) 814 13,868 (5,016) 8,852 (470) $ 8,382 $ $ 7,501 $ 5.73 $ 4.90 $ 4.26 $ 5.76 $ 4.95 $ 4.31 1,639 1,709 1,759 Basic 1,629 1,694 1,740 Consolidated Balance Sheets (in millions, except per share data) Oct. 1, 2016 Oct. 3, 2015 $ $ 4,610 9,065 1,390 1,208 ASSETS Current assets Cash and cash equivalents Receivables Inventories Television costs and advances Deferred income taxes Other current assets Total current assets Film and television costs Investments Parks, resorts and other property Attractions, buildings and equipment Accumulated depreciation 693 16,966 6,339 4,280 50,270 4,269 8,019 1,571 1,170 767 962 16,758 6,183 2,643 42,745 Projects in progress Land (26,849) 23,421 2,684 1,244 27,349 6,949 27,810 2,340 $ 92,033 _(24,844) 17,901 6,028 1,250 25,179 7,172 27,826 2,421 $ 88,182 Intangible assets, net Goodwill Other assets Total assets LIABILITIES AND EQUITY Current liabilities Accounts payable and other accrued liabilities Current portion of borrowings Unearned royalties and other advances Total current liabilities Borrowings Deferred income taxes Other long-term liabilities Commitments and contingencies (Note 14) Equity Preferred stock, $0.01 par value Authorized-100 million shares, Issued-none Common stock, $0.01 par value Authorized-4.6 billion shares, Issued-2.9 billion shares at October 1, 2016 and 2.8 billion shares at October 3, 2015 Retained earnings Accumulated other comprehensive loss $ 9,130 3,687 4,025 16,842 16,483 3,679 7,706 $ 7,844 4,563 3,927 16,334 12,773 4,051 6,369 35,859 35,122 Treasury stock, at cost, 1.3 billion shares at October 1, 2016 and 1.2 billion shares at October 3, 2015 Total Disney shareholders' equity Noncontrolling interests Total equity 66,088 (3,979) 97,968 (54,703) 43,265 4,058 47,323 59,028 (2,421) 91,729 (47,204) 44,525 4,130 48,655 Total liabilities and equity $ 92,033 $ 88,182 2016 2015 2014 $ 9,790 2,527 (26) 1,214 (926) 799 (101) 393 445 $ 8,852 2,354 (91) (102) (814) 752 (922) 410 341 $ 8,004 2,288 (299) 517 (854) 718 (964) 408 234 (393) 186 (137) 40 (598) 13, 213 (211) 1 34 (49) 354 10,909 (480) (81) (151 536 (96) 9,782 (4,265) 166 Consolidated Statements of Cash Flows (in millions) OPERATING ACTIVITIES Net income Depreciation and amortization Gains on acquisitions and dispositions Deferred income taxes Equity in the income of investees Cash distributions received from equity investees Net change in film and television costs Equity-based compensation Other Changes in operating assets and liabilities Receivables Inventories Other assets Accounts payable and other accrued liabilities Income taxes Cash provided by operations INVESTING ACTIVITIES Investments in parks, resorts, and other property Sales of investments/proceeds from dispositions Acquisitions Other Cash used in investing activities FINANCING ACTIVITIES Commercial paper borrowings, net Borrowings Reduction of borrowings Dividends Repurchases of common stock Proceeds from exercise of stock options Contributions from noncontrolling interest holders Other Cash used in financing activities Impact of exchange rates on cash and cash equivalents Change in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Supplemental disclosure of cash flow information: Interest paid Income taxes paid (4,773) 45 (850) (180) (5,758 (3,311) 395 (402) (27) (3,345) (146) (4,245) (920) 6,065 (2,205) (2,313) (7,499) 259 2,376 2,550 (2,221) (3,063) (6,095) 329 50 2,231 (1,648) (1,508) (6,527) 404 608 (378) (6,991) (123) 341 4,269 $ 4,610 1,012 (402) (5,514) (302) 848 3,421 $ 4,269 (320) (6,710) (235 (510) 3,931 $ 3,421 $ 395 $ 314 $ 310 $ 4,133 $ 4,396 $ 3,483 DISNEY'S 2016 INCOME TAXES FOOTNOTE EXCERPTS Income Taxes 2016 2015 2014 Income Before Income Taxes Domestic (including U.S. exports) Foreign subsidiaries $14,018 850 $14,868 $12,825 1,043 $13,868 $11,376 870 $12,246 Income Tax Expense/(Benefit) Current Federal State Foreign $ 3,146 154 533 3,833 $ 4,182 333 525 5,040 $ 2,932 206 600 3,738 Deferred Federal State Foreign 1,172 100 (27) 1,245 409 81 14 82 (52) (54) (24) $ 5,016 504 $ 5,078 $ 4,242 Oct. 1, 2016 Oct. 3, 2015 $(2,385) (1,567) (917) (4,869) $(2,244) (1,396) (945) (4,585) Components of Deferred Tax Assets and Liabilities Deferred tax assets Accrued liabilities Net operating losses and tax credit carryforwards Other Total deferred tax assets Deferred tax liabilities Depreciable, amortizable, and other property Foreign subsidiaries Licensing revenues Other Total deferred tax liabilities Net deferred tax liability before valuation allowance Valuation allowance Net deferred tax liability 5,682 348 480 295 6,805 1,936 1,602 $ 3,538 5,260 583 396 297 6,536 1,951 1,288 $ 3,239 At October 1, 2016, and October 3, 2015, the valuation allowance primarily related to $1.2 billion and $1.1 billion, respectively, of deferred tax assets for International Theme Parks's net operating losses primarily in France and Hong Kong, and to a lesser extent China A reconciliation of the effective income tax rate to the federal rate is as follows: Federal income tax rate State taxes, net of federal benefit Domestic production activity deduction Earnings in jurisdictions taxed at rates different from the statutory U.S. federal rate Disneyland Paris recapitalization Other, including tax reserves and related interest 2016 2015 2014 35.0% 35.0% 35.0% 1.8 1.9 2.0 (1.6) (1.9) (2.1) (1.1) (1.5) (0.7) 2.9 0.1 (0.2) 0.4 34.2% 36.2% 34.6%Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started