Reference no: EM13860267

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?

Total current taxes	$ 26,349
Total deferred taxes	(39,436)
Total income and mining taxes (the provision for taxes per its income statement)	(13,087)
Deferred tax liabilities	$303,050
Deferred tax assets, net of valuation allowance of $207,175	95,275
Net deferred tax liability	$207,775

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