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E10-38

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E10-38. Analyzing and Interpreting Income Tax Disclosures Colgate-Palmolive reports the following income tax footnote disclosure in its 10-K report. 2015 2014 Deferred Tax Balances at December 31 ($ millions) Deferred tax liabilities Goodwill and intangible assets. Property, plant and equipment. Other.. $ (458) (380) (150) (988) $ (497) (380) (266) (1,143) continued continued from prior page Deferred Tax Balances at December 31 ($ millions) 2015 2014 Deferred tax assets Pension and other retiree benefits Tax loss and tax credit carryforwards. Accrued liabilities. Stock-based compensation Other. 541 30 235 123 151 638 33 276 119 148 1,080 1,214 Net deferred income taxes $ 92 $ 71 a. Colgate reports $380 million of deferred tax liabilities in 2015 relating to “Property.” Explain how such liabilities arise. b. Describe how a deferred tax asset can arise from pension and other retiree benefits. c. Colgate reports $30 million in deferred tax assets for 2015 relating to tax loss and tax credit carryfor- wards. Describe how tax loss carryforwards arise and under what conditions the resulting deferred tax assets will be realized. d. Colgate's income statement reports income tax expense of $1,215 million. Assume that cash paid for income tax is $1,259 million and that taxes payable decreased by $23 million. Use the financial state- ment effects template to record tax expense for 2015. (Hint: Show the effects of changes in deferred taxes.)