Adjustments for Deferred Tax Asset Valuation Allowance Consider the following income tax footnote information for Oracle for the fiscal year ended May 31, 2019 (fiscal year 2019). The following is a geographical breakdown of income before the provision for income taxes: Year Ended May 31 (in millions) 2019 2018 2017 Domestic $3,397 $3,029 $3,307 Foreign 7,645 8,152 7,205 Income before provision for income taxes $11,042 $11,181 $10,512 The provision for income taxes consisted of the following: 2019 2018 2017 Year Ended May 31 ($ in millions) Current provision: Federal $881 $7,488 $842 State 270 238 231 Foreign Total current provision Deferred benefit: 987 990 1,328 $2,138 $8,716 $2,401 Federal State Foreign $435 $(744) $(142) (25) (23) (26) (1,481) 5 (228) $(1,071) $(762) $(396) $1,067 $7,954 $2,005 Total deferred benefit Total provision for income taxes The provision for income taxes differed from the amount computed by applying the federal statutory rate to our income before provision for income taxes as follows: 2019 2018 2017 21.0% 29.2% 35.0% Year Ended May 31 ($ in millions) U.S federal statutory tax rate Tax provision at statutory rate Impact of the Tax Act of 2017: One-time transition tax $2,318 $3,266 $3,679 (476) Deferred tax effects 126 7,003 (820) (896) (1,181) (710) 177 128 135 Foreign earnings at other than United States rates State tax expense, net of federal benefit Settlements and releases from judicial decisions and statute expirations, net Domestic production activity deduction Federal research and development credit Stock-based compensation Other, net Total provision for income taxes (119) (227) (170) (78) (107) (142) (157) (114) (181) (272) (134) 5 (103) $1,066 $7,952 $2,005 73 The components of our deferred tax assets and liabilities were as follows: May 31 (in millions) 2019 2018 Deferred tax assets: $487 $510 581 598 290 304 1,114 3,345 2,353 Accruals and allowances Employee compensation and benefits Differences in timing of revenue recognition Basis of property, plant and equipment and intangible assets Tax credit and net operating loss carryforwards Total deferred tax assets Valuation allowance Total deferred tax assets, net Deferred tax liabilities: Unrealized gain on stock Acquired intangible assets GILTI deferred Basis of property, plant and equipment an intangible assets Other 5,817 3,765 (1,139) (1,177) 4,678 2,588 (70) (70) (876) (1,129) (1,364) (142) (180) (43) (2,490) (1,384) $2,188 $1,204 Total deferred tax liabilities Net deferred tax assets $ millions 2016 2017 Total deferred tax asset $5,577 $4,442 Valuation allowance 1,048 1,056 Required a. Use the four-year average valuation allowance to deferred tax assets (2016-2019) of 22.55% to adjust the income statement for each of the four years 2016-2019. Follow Analyst Adjustments 10.3 for guidance in the adjustment process. Note: Use a negative sign to indicate an income statement reversal. Note: Do not round until your final answer; round your final answers below to the nearest whole dollar. 2016 2017 2018 2019 Income Statement Adjustments (5 millions) Income tax expense Net income $ 0 0$ 0 0 0 b. Adjust the balance sheet for each of the four years 2016-2019. Note: Use a negative sign to indicate a decrease of the balance sheet accounts. Note: Round your answers to the nearest whole dollar. Balance Sheet Adjustments 2016 2017 2018 2019 ($ millions) Valuation allowance $ $ Deferred tax assets, net 0 0 Total assets 0 0 0 Retained Earnings 0 0 0 Adjustments for Deferred Tax Asset Valuation Allowance Consider the following income tax footnote information for Oracle for the fiscal year ended May 31, 2019 (fiscal year 2019). The following is a geographical breakdown of income before the provision for income taxes: Year Ended May 31 (in millions) 2019 2018 2017 Domestic $3,397 $3,029 $3,307 Foreign 7,645 8,152 7,205 Income before provision for income taxes $11,042 $11,181 $10,512 The provision for income taxes consisted of the following: 2019 2018 2017 Year Ended May 31 ($ in millions) Current provision: Federal $881 $7,488 $842 State 270 238 231 Foreign Total current provision Deferred benefit: 987 990 1,328 $2,138 $8,716 $2,401 Federal State Foreign $435 $(744) $(142) (25) (23) (26) (1,481) 5 (228) $(1,071) $(762) $(396) $1,067 $7,954 $2,005 Total deferred benefit Total provision for income taxes The provision for income taxes differed from the amount computed by applying the federal statutory rate to our income before provision for income taxes as follows: 2019 2018 2017 21.0% 29.2% 35.0% Year Ended May 31 ($ in millions) U.S federal statutory tax rate Tax provision at statutory rate Impact of the Tax Act of 2017: One-time transition tax $2,318 $3,266 $3,679 (476) Deferred tax effects 126 7,003 (820) (896) (1,181) (710) 177 128 135 Foreign earnings at other than United States rates State tax expense, net of federal benefit Settlements and releases from judicial decisions and statute expirations, net Domestic production activity deduction Federal research and development credit Stock-based compensation Other, net Total provision for income taxes (119) (227) (170) (78) (107) (142) (157) (114) (181) (272) (134) 5 (103) $1,066 $7,952 $2,005 73 The components of our deferred tax assets and liabilities were as follows: May 31 (in millions) 2019 2018 Deferred tax assets: $487 $510 581 598 290 304 1,114 3,345 2,353 Accruals and allowances Employee compensation and benefits Differences in timing of revenue recognition Basis of property, plant and equipment and intangible assets Tax credit and net operating loss carryforwards Total deferred tax assets Valuation allowance Total deferred tax assets, net Deferred tax liabilities: Unrealized gain on stock Acquired intangible assets GILTI deferred Basis of property, plant and equipment an intangible assets Other 5,817 3,765 (1,139) (1,177) 4,678 2,588 (70) (70) (876) (1,129) (1,364) (142) (180) (43) (2,490) (1,384) $2,188 $1,204 Total deferred tax liabilities Net deferred tax assets $ millions 2016 2017 Total deferred tax asset $5,577 $4,442 Valuation allowance 1,048 1,056 Required a. Use the four-year average valuation allowance to deferred tax assets (2016-2019) of 22.55% to adjust the income statement for each of the four years 2016-2019. Follow Analyst Adjustments 10.3 for guidance in the adjustment process. Note: Use a negative sign to indicate an income statement reversal. Note: Do not round until your final answer; round your final answers below to the nearest whole dollar. 2016 2017 2018 2019 Income Statement Adjustments (5 millions) Income tax expense Net income $ 0 0$ 0 0 0 b. Adjust the balance sheet for each of the four years 2016-2019. Note: Use a negative sign to indicate a decrease of the balance sheet accounts. Note: Round your answers to the nearest whole dollar. Balance Sheet Adjustments 2016 2017 2018 2019 ($ millions) Valuation allowance $ $ Deferred tax assets, net 0 0 Total assets 0 0 0 Retained Earnings 0 0 0