Recording Income Tax Expense

Nike, Inc., reports the following tax information in Note 9 to its 2014 financial report. Income before income taxes is as follows:

Year Ended May 31 (In millions)	2014	2013	2012
Income before income taxes:
United States	$1,084	$699	$846
Foreign	1,760	1,818	1,111
	$2,844	$2,517	$1,957

The provision for income taxes is as follows:

Year Ended May 31 (In millions)	2014	2013	2012
Current:
United States
Federal	$289	$200	$410
State	57	50	46
Foreign	461	369	328
	807	619	784
Deferred:
United States
Federal	(61)	18	(251)
State	-	(1)	(8)
Foreign	(16)	(7)	(36)
	(77)	10	(295)
	$730	$629	$489

Required a. Record Nikes provision for income taxes for 2014 using the financial statement effects template. Enter answers in millions in the appropriate account columns, using the second row only if additional space is needed.

Balance Sheet
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contrib. Capital	+	Earned Capital
To record income tax expense	$Answer	+	$Answer	=	$807	+	$Answer	+	$Answer
	Answer	+	Answer	=	Answer	+	Answer	+	Answer

Income Statement
	Revenue	-	Expenses	=	Net Income
	$Answer	-	$Answer	=	$Answer

b. Explain how the provision for income taxes affects Nikes financial statements.

Net income	AnswerIncreasedDecreasedNo change	by	$Answer	million
Liabilities	AnswerIncreasedDecreasedNo change	by	$Answer	million

c. Calculate and compare Nikes effective tax rate for 2014, 2013, and 2012. Round to one decimal place.

2012	Answer%
2013	Answer%
2014	Answer%