B6013 Financial Accounting

Spring 2011
Professor Urooj Khan
Problem Set #9

This problem set has 2 questions.

Question 1: General Mills Taxes
Using General Mills 2009 financial statements and income tax footnote (note 14) answer the
following questions.
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.

What is General Mills total income tax expense for 2009?

What is General Mills current portion of the tax expense for 2009?
What is the deferred component of the tax expense for 2009?
How much did General Mills pay in cash for income taxes during 2009 (see note 17)?
Is the cash taxes paid higher or lower than the current portion of the income tax expense?
Why do you think these are different?
General Mills has a deferred tax liability of $308.1 million for 2009 relating to depreciation.
What does this liability represent (describe in words)?
General Mills has a deferred tax asset of $221.7 relating to unrealized losses. Why do these
losses give rise to a deferred tax asset (describe in words)?
What was the deferred tax assets valuation allowance for General Mills for 2008 and 2009?
By how much did this allowance increase or decrease in 2009?
What effect did the change in this allowance have on General Millss tax expense and on its
net income in 2009?
Note 17 shows accrued taxes as part of other current liabilities and other non-current
liabilities and the Balance sheet shows other amounts for deferred tax assets and liabilities in
2009. Explain briefly what this indicates to you about the nature of these amounts and any
cash implications for 2010?

1
B6013 Spring 2011 Columbia Business School
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Question 2: General Mills Retirement and Post Retirement Benefits

Using General Mills 2009 financial statements and note 13 answer the following questions for
2009 only unless stated otherwise.
1. What is the Estimate of the Present Value of its obligations?
(a) Pensions
(b) Other Post Retirement Benefits
2. What is the Fair Value of its Plan Assets?
(a) Pensions
(b) Other Post Retirement Benefits
3. What is the difference, and is it an asset or liability?
(a) Pensions
(b) Other Post Retirement Benefits
4. What were the benefits actually paid to retirees?
(a) Pensions
(b) Other Post Retirement Benefits
5. What is the Service Cost, Interest Cost, Expected Return on Plan Assets and Net expense?
(a) Pensions
(b) Other Post Retirement Benefits
6. What was the actual return on pension plan assets in 2008 and 2009, in nominal dollar and
percentage terms?
7. What is the cash contribution for pension plans in 2008 and 2009?

2
B6013 Spring 2011 Columbia Business School
You may only share these materials with current term students.