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).
Instructions
(a) What is the significance of Homestakes disclosure of Current taxes of $26,349 and Deferred taxes of $(39,436)?
(b) Explain the concept behind Homestakes disclosure of gross deferred tax liabilities (future taxable amounts) and gross deferred tax assets (future deductible amounts).
(c) Homestake reported tax loss carry forwards of $71,151 and tax credit carry forwards of $12,007. How do the carry back and carry forward provisions affect the reporting of deferred tax assets and deferred tax liabilities?
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Total current taxes
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$ 26,349
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Total deferred taxes
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(39,436)
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Total income and mining taxes (the provision for taxes per its income statement)
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(13,087)
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Deferred tax liabilities
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$303,050
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Deferred tax assets, net of valuation allowance of $207,175
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95,275
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Net deferred tax liability
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$207,775
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Note 6: 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 liabilities are classified based on the estimated period of reversal.
Tax loss carry forwards (U.S., Canada, Australia, and Chile) $71,151
Tax credit carry forwards $12,007