Required: 1. As indicated in the note, Delta had both deferred tax assets and deferred tax liabilities at the end of 2013. Some of each were current, some noncurrent. The balance sheet that year, though, reported only noncurrent deferred tax assets and current deferred tax assets. Explain why Delta's current deferred tax liabilities and noncurrent deferred tax liabilities were not explicitly reported. Explain what the current and noncurrent deferred tax assets represent. 2. What is a valuation allowance against deferred tax assets? When must such an allowance be recorded? Use Delta's situation to help illustrate your response. 3. Is an amount recorded in a valuation allowance for a deferred tax asset permanent? Explain why Delta is able to reclaim its valuation allowance. 4. Consider the excerpt from Bloomberg's press release. Recalculate the effect on Delta's 2013 net income of the change in Delta's valuation allowance for its deferred tax assets.

Required: 1. As indicated in the note, Delta had both deferred tax assets and deferred tax liabilities at the end of 2013. Some of each were current, some noncurrent. The balance sheet that year, though, reported only noncurrent deferred tax assets and current deferred tax assets. Explain why Delta's current deferred tax liabilities and noncurrent deferred tax liabilities were not explicitly reported. Explain what the current and noncurrent deferred tax assets represent. 2. What is a valuation allowance against deferred tax assets? When must such an allowance be recorded? Use Delta's situation to help illustrate your response. 3. Is an amount recorded in a valuation allowance for a deferred tax asset permanent? Explain why Delta is able to reclaim its valuation allowance. 4. Consider the excerpt from Bloomberg's press release. Recalculate the effect on Delta's 2013 net income of the change in Delta's valuation allowance for its deferred tax assets.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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