Reference no: EM132562774
Question - Homestake Mining Company is a 120-year-old international gold mining company with substantial gold mining operations and exploration in the United States, Canada, and Australia. At year-end, Homestake reported the following items related to income taxes (thousands of dollars).
Total current taxes $26,349
Total deferred taxes (39,436)
Total income and mining taxes $(13,087) (the provision for taxes per its income statement)
Deferred tax liabilities $303,050
Deferred tax assets, $95,275 (net of valuation allowance of $207,175)
Net deferred tax liability $207,775
The classification of deferred tax assets and liabilities is based on the related asset or liability creating the deferred tax. Deferred taxes not related to a specific asset or liability are classified based on the estimated period of reversal.
Tax loss carryforwards (U.S., Canada, Australia, and Chile) $71,151
Tax credit carryforwards $12,007
Answer each of the following questions:
1. What is the significance of Homestake's disclosure of "Current taxes" of $26,349 and "Deferred taxes" of $(39,436)?
2. Explain the concept behind Homestake's disclosure of gross deferred tax liabilities (future taxable amounts) and gross deferred tax assets (future deductible amounts).
3. Homestake reported tax loss carryforwards of $71,151 and tax credit carryforwards of $12,007. How do the carryforward provisions affect the reporting of deferred tax assets and deferred tax liabilities?
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