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32 Brother Annual Report 2007
Notes to Consolidated Financial Statements
Brother Industries, Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2007 and 2006
10. Income Taxes
The Company and its domestic subsidiaries are subject to Japanese national and local income
taxes which, in the aggregate, resulted in normal effective statutory tax rate of approximately
41% for the years ended M arch 31, 2007 and 2006.
The tax effects of significant temporary differences and tax loss carryforwards w hich resulted in
deferred tax assets and liabilities at M arch 31, 2007 and 2006 w ere as follow s:
64,907
17,686
38,780
59,280
14,661
9,602
28,102
33,932
7,975
10,618
39,398
(58,382)
266,559
(27,644)
(30,881)
(14,186)
(43,263)
(26,610)
(5,831)
(148,415)
118,144
0
7,996
1,944
-
7,113
2,076
1,554
2,619
4,383
767
-
6,345
(6,627)
28,170
(3,262)
(3,320)
(1,801)
(4,683)
(3,837)
(717)
(17,620)
10,550
30
7,659
2,087
4,576
6,995
1,730
1,133
3,316
4,004
941
1,253
4,649
(6,889)
31,454
(3,262)
(3,644)
(1,674)
(5,105)
(3,140)
(688)
(17,513)
13,941
0
Deferred Tax Assets:
Inventory
Accrued bonuses
Accrued expenses
Allow ance for doubtful accounts
Warranty reserve
Employees' retirement benefits
Write-down of investment securities
Depreciation
Tax loss carryforw ards
Deferred loss under hedge accounting
Other
Less valuation allowance
Total deferred tax assets
Deferred Tax Liabilities:
Securities w ithdraw n from retirement benefit trust
Prepaid pension cost
Differences betw een book and tax bases of property, plant and equipment
Undistributed earnings of foreign subsidiaries
Unrealized gain on available-for-securities
Other
Total deferred tax liabilities
Net deferred tax assets
Deferred Tax Assets for land revaluation
Thousands of
U.S. Dollars
200720062007
Millions of Yen
¥
¥
¥
¥
¥
¥
$
$
$
A reconciliation betw een the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated
statements of income for the year ended M arch 31, 2007 w as as follow s:
A reconciliation betw een the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying consolidated
statements of income for the year ended M arch 31, 2006 w as not disclosed because the difference w as not material.
40.50%
1.12
(1.35)
(2.98)
(2.59)
0.79
1.38
36.87%
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Revenues not recognized for income tax purposes
Low er income tax rates applicable to income in certain foreign countries
Tax credit for R&D expenses
Taxes on dividends from foreign subsidiaries
Other - net
Actual effective tax rate
2007