This is the link to the 10-K analysis needed to answer the question..... http://
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This is the link to the 10-K analysis needed to answer the question.....
http://otp.investis.com/clients/us/ford_motors/SEC/sec-show.aspx?FilingId=11834820&Cik=0000037996&Type=PDF&hasPdf=1
Write a 350-to 700-word paper describing the amounts of current and deferred income taxes Explain the items that affect both these classifications. Provide details of the current and long-term portion of the deferred taxes. Be sure to list the Note number where you found your information Format your paper consistent with APA standardsExplanation / Answer
Accounting of Income Tax:
Abstract:
The purpose of this study is to clarify the objective of Accounting for Income Taxes and the basic Principles applied in accounting for Income Taxes at the date of financial statement. The outcome of the study is to understand the components that affect the Current and Deferred Income Taxes in any Company. The study will also encompass the details of current and long-term portion of the deferred tax asset shown in the balance sheet. For this purpose, section 10-K filing of Ford Motors INC for the year ended on 31-Dec-2016 was analysed and the components of current Income Tax and Deferred tax has been identified from Note 13 annexed to the section 10-K filing done by the Company. For this purpose the guidelines issued by FASB gas been also referred for this purpose.
Key Concepts:
The objectives of accounting for Income Taxes are to recognize (i) the Income taxes accountability for the present year and (ii) recognition of delayed tax properties or the responsibilities which are resulting to the events that are recognized in the balance sheet of the company.
The principles applied for accounting of Income Tax are:
A temporary timing difference is created due to change in accounting method between tax accounts and financial statements. Temporary difference ordinarily become taxable or deductible when the related asset is improved or related liability is settled.
A delayed tax liability is recognized for temporary differences that will result in taxable amount in future years.
A delayed tax asset is recognized for temporary differences that will result in deductible amounts in future years and for carry forwards.
Deferred Tax Assets and Liabilities in Financial Statement of Ford INC:
The Company follows the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate. At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, according to the requirements of tax laws. The measurement of deferred tax assets and deferred tax liabilities replicates the tax significances that would follow from the manner in which the company expects at the balance sheet date, to recover the assets or settle the liabilities. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to offset current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation consultant.
Components of Deferred Tax Assets and Liabilities are:
Inventory Provision
Change in fair value of financial instruments
Accrued Liabilities and accrued payroll
Long term asset provision
Deferred government grants and others
Warranty liability
Total Deferred Tax Assets
Change in fair value of financial instruments
Total Deferred Tax Liabilities
Total net deferred tax assets
Ford classified the whole Deferred Tax Asset as non-current asset which is long-term deferred tax asset for this year. There is no amount considered as current portion of Deferred Tax Asset.
Reference:
FASB statement relating to Accounting for Income Tax
SEC-10K filing of Ford Motors
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