The complete financial statements of Stora Enso Oyj for the company's year ended December 31, 2011, are available at the company's website (www.storaenso.com). Refer to Stora Enso's financial statements and accompanying notes and answer the following questions.
Instructions
(a) Identify all income tax accounts reported on the December 31, 2011 statement of financial position. Explain clearly what each account represents.
(b) What are the temporary differences that existed at December 31, 2011, and resulted in the deferred taxes? Which of these differences might relate to the deferred tax assets and which ones to the deferred tax liabilities? Explain the reasons for your answers.
(c) Reconcile the opening balance to the closing balance for the deferred tax accounts for the year ended December 31, 2011. What are the major transactions causing the balance to change from January 1 to December 31?
(d) Does Stora Enso's management think it is probable that the benefits related to future deductible amounts will be realized? Explain. What are the gross amounts of the loss carry forwards that the company has available and what are the expiry dates for these losses?
(e) Has Stora Enso applied intraperiod tax allocation in 2011? Explain.
(f) How much income tax did Stora Enso pay in 2011? Where did you find this information?
(g) What was the effective tax rate for Stora Enso in 2011? In 2010? What were the major causes of the differences between the statutory and effective tax rates for 2011 and 2010? For each reason you give, indicate whether the effective rate was made higher or lower than the statutory rate.