Blackberry 2014 Annual Report Download - page 112

BlackBerry Limited
Notes to the Consolidated Financial Statements
In millions of United States dollars, except share and per share data, and except as otherwise indicated
23
Deferred income tax assets and liabilities consist of the following temporary differences:
As at
March 1, 2014 March 2, 2013
Assets
Property, plant and equipment $ 430 $ —
Non-deductible reserves 120 182
Minimum taxes 120 —
Convertible debenture (see note 8) 95 —
Research and development 41 —
Tax loss carryforwards 25 28
Other 25 2
Deferred income tax assets 856 212
Valuation allowance 783 —
Deferred income tax assets net of valuation allowance 73 212
Liabilities
Property, plant and equipment — (287)
Research and development — (31)
Withholding tax on unremitted earnings (32) —
Deferred income tax liabilities (32)(318)
Net deferred income tax asset/(liability) $ 41 $ (106)
Deferred income tax asset - current $ 73 $ 139
Deferred income tax liability - long-term (32)(245)
$ 41 $ (106)
The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that
assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the
deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some
or all of the deferred tax assets will be realized. In evaluating the need for a valuation allowance, the Company noted that
there were significant increases in deductible temporary differences in fiscal 2014 in relation to the LLA Impairment
Charge, which was not currently deductible for tax purposes. In addition, the Company has three years of cumulative
losses for fiscal 2014. As a result, the Company was unable to recognize the benefit relating to a significant portion of
deferred tax assets that arose in fiscal 2014, which resulted in the recognition of a $783 million valuation allowance
against its deferred tax assets. The deferred tax recovery is partially offset by this deferred tax valuation allowance of
$781 million and included in the income tax provision in fiscal 2014 (March 2, 2013 - nil). This accounting treatment has
no effect on the Company’s actual ability to utilize deferred tax assets to reduce future cash tax payments. The Company
will continue to assess the likelihood that the deferred tax assets will be realizable at each reporting period and the
valuation allowance will be adjusted accordingly.
During the third quarter, the Company took steps to accelerate the receipt of a portion of the tax refund to which it is
entitled. The Canadian federal and Ontario provincial Ministers of Finance had indicated to the Company that they would
be prepared to recommend measures such that the acceleration would not jeopardize the entitlement to the balance of its
tax refund. The Company's actions resulted in a November 3, 2013 taxation year end (triggering the entitlement to the tax
refund accrued to that date). In December 2013, Remission Orders were made by the Canadian federal and Ontario
provincial governments which preserved the Company's ability to carry back losses for the balance of its fiscal 2014 year
and for its fiscal 2015 year on the same basis as without the November 3, 2013 taxation year end. The tax provision
includes the impact of the Remission Orders in accordance with ASC 740.
Given the change in financial circumstances for the Company in fiscal 2014 (see Note 1 - Critical Accounting Estimates -
Valuation of Long-Lived Assets), a determination was made that the Company no longer has plans to permanently