Income Tax Accounting Policy
Dow Chemical accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities using enacted rates. The effect of a change in tax rates on deferred tax assets is recognized in income in the period that includes the enactment date.
Annual tax provisions include amounts considered sufficient to pay assessments that may result from examinations of prior year tax returns; however, the amount ultimately paid upon resolution of issues raised may differ from the amounts accrued.
Dow Chemical recognizes the financial statement effects of an uncertain income tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Dow Chemical accrues for other tax contingencies when it is probable that a liability to a taxing authority has been incurred and the amount of the contingency can be reasonably estimated. The current portion of uncertain income tax positions is included in "Income taxes payable" and the long-term portion is included in "Other noncurrent obligations" in the consolidated balance sheets.
Provision is made for taxes on undistributed earnings of foreign subsidiaries and related companies to the extent that such earnings are not deemed to be permanently invested.
Source: Dow Chemical Co., Annual Report
Income Tax Expense (Benefit)
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Dow Chemical Co., income tax expense (benefit), continuing operations
Source: Based on data from Dow Chemical Co. Annual Reports
| Item |
Description |
The company |
| Current |
The component of income tax expense for the period representing amounts of income taxes paid or payable (or refundable) for the period for all income tax obligations as determined by applying the provisions of relevant enacted tax laws to relevant amounts of taxable income (loss) from continuing operations. |
Dow Chemical Co.'s current declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
| Deferred |
The component of income tax expense for the period representing the net change in the entity's deferred tax assets and liabilities pertaining to continuing operations. |
Dow Chemical Co.'s deferred increased from 2009 to 2010 but then slightly declined from 2010 to 2011.
|
| Provision (credit) for income taxes |
The sum of the current income tax expense (benefit) and the deferred income tax expense (benefit) pertaining to pretax income (loss) from continuing operations; income tax expense (benefit) may include interest and penalties on tax uncertainties based on the entity's accounting policy. |
Dow Chemical Co.'s provision (credit) for income taxes increased from 2009 to 2010 and from 2010 to 2011.
|
Deferred Tax Assets (Liabilities), Net
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Dow Chemical Co., deferred tax assets (liabilities), net
Source: Based on data from Dow Chemical Co. Annual Reports
| Item |
Description |
The company |
| Deferred tax assets, gross |
The sum of the tax effects as of the balance sheet date of the amounts of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws (before the valuation allowance, if any, to reduce such sum amount to net realizable value). Includes any tax benefit realized in deferred tax assets for significant impacts of tax planning strategies. |
Dow Chemical Co.'s deferred tax assets, gross increased from 2009 to 2010 and from 2010 to 2011.
|
| Deferred tax assets |
The aggregate tax effects as of the balance sheet date of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; net of deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value. |
Dow Chemical Co.'s deferred tax assets increased from 2009 to 2010 and from 2010 to 2011.
|
| Deferred tax balances at December 31 |
For entities that net deferred tax assets and tax liabilities, represents the unclassified net amount of deferred tax assets and liabilities as of the balance sheet date, which result from applying the applicable enacted tax rate to net temporary differences and carryforwards pertaining to assets or liabilities. A temporary difference is a difference between the tax basis of an asset or liability and its carrying amount in the financial statements prepared in accordance with generally accepted accounting principles that will reverse in ensuing periods. |
Dow Chemical Co.'s deferred tax balances at December 31 declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
