Pepsi 2013 Annual Report Download - page 105
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87
Deferred tax liabilities and assets are comprised of the following:
Deferred tax liabilities 2013 2012
Pension benefits $84
$—
Debt guarantee of wholly owned subsidiary 828 828
Property, plant and equipment 2,327 2,424
Intangible assets other than nondeductible goodwill 4,348 4,388
Other 361 308
Gross deferred tax liabilities 7,948 7,948
Deferred tax assets
Net carryforwards 1,485 1,378
Stock-based compensation 303 378
Retiree medical benefits 384 411
Other employee-related benefits 627 672
Pension benefits —647
Deductible state tax and interest benefits 155 345
Long-term debt obligations acquired 125 164
Other 959 863
Gross deferred tax assets 4,038 4,858
Valuation allowances (1,360) (1,233)
Deferred tax assets, net 2,678 3,625
Net deferred tax liabilities $ 5,270 $ 4,323
Deferred taxes are included within the following balance sheet accounts:
2013 2012
Assets:
Prepaid expenses and other current assets $ 716 $ 740
Liabilities:
Deferred income taxes $ 5,986 $ 5,063
A summary of our valuation allowance activity is as follows:
2013 2012 2011
Balance, beginning of year $ 1,233 $ 1,264 $ 875
Provision 111 68 464
Other additions/(deductions) 16 (99) (75)
Balance, end of year $ 1,360 $ 1,233 $ 1,264
In the second quarter of 2010, the Patient Protection and Affordable Care Act (PPACA) was signed into law.
The PPACA changes the tax treatment related to an existing retiree drug subsidy (RDS) available to sponsors
of retiree health benefit plans that provide a benefit that is at least actuarially equivalent to the benefits under
Medicare Part D. As a result of the PPACA, RDS payments became taxable in tax years beginning in 2013,
by requiring the amount of the subsidy received to be offset against our deduction for health care expenses.
The provisions of the PPACA required us to record the effect of this tax law change beginning in our second
quarter of 2010, and consequently we recorded a one-time related tax charge of $41 million in the second
quarter of 2010. In the first quarter of 2012, we began pre-paying funds within our 401(h) accounts intended
to fully cover prescription drug benefit liabilities for Medicare eligible retirees. As a result, the receipt of