McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 35

Access the 2009 Annual Report for Johnson Johnson Company and answer the following questions.You can access the annual report at www.nJ.om
Required:
a.Using information from the company's income statement and income taxes footnote, what was the company's effective tax rate for 2009? Show how the rate is calculated.b.Using information from the statement of cash flows, calculate the company's cash tax rate.c.What does the company's income taxes note tell you about where the company earns its international income? Why does earning income in these countries cause the effective tax rate to decrease?
d.What item creates the company's largest deferred tax asset? Explain why this item creates a deductible temporary difference.e.What item creates the company's largest deferred tax liability? Explain why this item creates a taxable temporary difference.f.How does the company classify its income taxes payable related to its unrecognized tax benefits on the balance sheet?
g.How does the company treat interest and penalties related to its unrecognized tax benefits?