Mazda 2008 Annual Report Download - page 81

Deferred tax assets and liabilities reflect the estimated tax effects of loss carryforwards and accumulated
temporary differences between assets and liabilities for financial accounting purposes and those for tax purposes. The
significant components of deferred tax assets and liabilities at March 31, 2008 and 2007 were as follows:
Thousands of
Millions of yen U.S. dollars
As of March 31 2008 2007 2008
Deferred tax assets:
Allowance for doubtful receivables ¥ 1,655 ¥ 1,721 $ 16,550
Employees’ severance and retirement benefits 40,043 44,517 400,430
Loss on impairment of fixed assets 6,691 8,046 66,910
Accrued bonuses and other reserves 37,875 29,893 378,750
Inventory valuation 4,281 5,019 42,810
Valuation loss on investment securities, etc. 1,206 1,438 12,060
Net operating loss carryforwards 12,736 14,126 127,360
Other 70,568 76,037 705,680
Total gross deferred tax assets 175,055 180,797 1,750,550
Less valuation allowance (21,014) (23,911) (210,140)
Total deferred tax assets 154,041 156,886 1,540,410
Deferred tax liabilities:
Reserves under Special Taxation Measures Law (7,193) (7,756) (71,930)
Other (10,254) (3,643) (102,540)
Total deferred tax liabilities (17,447) (11,399) (174,470)
Net deferred tax assets ¥136,594 ¥145,487 $1,365,940
The net deferred tax assets are included in the following accounts in the consolidated balance sheets:
Thousands of
Millions of yen U.S. dollars
As of March 31 2008 2007 2008
Current assets—Deferred taxes ¥ 92,594 ¥ 97,184 $ 925,940
Investments and other assets—Deferred taxes 45,516 48,449 455,160
Current liabilities—Other (5) (1) (50)
Other long-term liabilities (1,511) (145) (15,110)
Net deferred tax assets ¥136,594 ¥145,487 $1,365,940
14. PRIOR YEAR INCOME TAXES
Prior year income taxes recorded in the year ended March 31, 2008 are primarily for the taxes that the Company
was subject to a tax audit by the Hiroshima Regional Taxation Bureau. As a result of the tax audit, the Company had
reassessment and corrected certain prior year income tax filings to pay additional income taxes and penalties in
accordance with the reassessment in January 2008. These additional income taxes and penalties, which amounted to
a total of ¥6,290 million ($62,900 thousand), were recognized as prior year income taxes in the statement of income
for the year ended March 31, 2008.
Also, prior year income taxes recorded in the year ended March 31, 2007 are primarily for the taxes that the
Company expects to pay on transactions between the Company and its domestic dealerships. The Company bears
part of the expenses that its dealerships incur for sales and promotional activities. Recent internal investigation has
unveiled transactions that are not deductible for the purpose of income tax filing due to inappropriate documentation
for invoices and payments as well as unclear grounds for the determination of the amounts to be borne by the
Company. As a result, the Company has recognized the estimated additional taxes for the prior three years of ¥3,229
million, as prior year income taxes in the consolidated statement of income for the year ended March 31, 2007. The
estimated amount of ¥3,229 million is net of deferred taxes of ¥293 million on those portions of prefectural taxes that
are deductible in the future federal income tax filings.
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