Question
Reformulation for Deferred Tax Asset Valuation Allowance Under Armour Inc. reports total tax expense of $154,112 thousand on its income statement for year ended December
Reformulation for Deferred Tax Asset Valuation Allowance
Under Armour Inc. reports total tax expense of $154,112 thousand on its income statement for year ended December 31, 2015, and paid cash of $99,708 thousand for taxes. The tax footnote in the company's 10-K filing, reports the following deferred tax assets and liabilities information.
December 31 ($ thouands) 2015 2014
Deferred tax assets
Stock-based compensation $ 42,628 $ 37,383
Allowance for doubtful accounts and other reserves 36,043 26,996
Accrued expenses 19,999 11,398
Foreign net operating loss carryforward 19,600 16,302
Deferred rent 13,991 11,005
Inventory obsolescence reserves 11,956 8,198
Tax basis inventory adjustment 10,019 5,845
U.S. net operating loss carryforward 9,217 4,733
Foreign tax credits 6,151 5,131
State tax credits, net of foreign impact 4,966 4,245
Deferred compensation 2,080 1,858
Other 6,346 4,592
Total deferred tax assets 182,996 137,686
Less: valuation allowance (23,821) (15,328)
Total net deferred tax assets 159,175 122,358
Deferred tax liability
Property, plant and equipment (31,069) (17,638)
Intangible asset (22,820) (7,010)
Prepaid expenses (8,766) (6,424)
Other (627) (612)
Total deferred tax liabilities (63,282) (31,684)
Total deferred tax assets, net $ 95,893 $ 90,674
Use the above information along with the information below to answer the requirements.
$ thousands 2012 2013
Deferred tax asset $ 66,675 $ 108,599
Valuation allowance 4,188 7,747
a. Use the four-year average valuation allowance to deferred tax assets (2012 through 2015) to reformulate the income statement for each of the four years 2012-2015. See Analyst Adjustments 10.3 for guidance in the reformulation process.
Compute four year average of valuation allowance/deferred tax assets
Round to one decimal place (ex: 0.2345 = 23.5%)
Answer
0
%
Use rounded percentage for subsequent computations.
Round answers to the nearest whole number.
Use negative signs with answers to indicate adjustments that reduce account balances.
Income Statement Adjustments 2012 2013 2014 2015
Income tax expense Answer
0
Answer
0
Answer
0
Answer
0
Net income Answer
0
Answer
0
Answer
0
Answer
0
b. Reformulate the balance sheet for each of the four years 2012-2015.
Use rounded answers computed in part a. to complete the table below.
Use negative signs with answers to indicate adjustments that reduce account balances.
Balance Sheet Adjustments 2012 2013 2014 2015
Valuation allowance Answer
0
Answer
0
Answer
0
Answer
0
Deferred tax assets Answer
0
Answer
0
Answer
0
Answer
0
Total assets Answer
0
Answer
0
Answer
0
Answer
0
Retained earnings Answer
0
Answer
0
Answer
0
Answer
0
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Management Accounting Information for creating and managing value
Authors: Kim Langfield Smith, David Smith, Paul Andon, Ronald Hilton, Helen Thorne
8th edition
9781760420413 , 978-1760420406
