Income Tax Accounting Policy
Deferred taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting based on enacted tax laws and rates. Merck evaluates tax positions to determine whether the benefits of tax positions are more likely than not of being sustained upon audit based on the technical merits of the tax position. For tax positions that are more likely than not of being sustained upon audit, Merck recognizes the largest amount of the benefit that is greater than 50% likely of being realized upon ultimate settlement in the financial statements. For tax positions that are not more likely than not of being sustained upon audit, Merck does not recognize any portion of the benefit in the financial statements. Merck recognizes interest and penalties associated with uncertain tax positions as a component of Taxes on income in the Consolidated Statement of Income.
Source: Merck & Co. Inc., Annual Report
Income Tax Expense (Benefit)
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Merck & Co. Inc., income tax expense (benefit), continuing operations
Source: Based on data from Merck & Co. Inc. Annual Reports
| Item |
Description |
The company |
| Current provision |
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. |
Merck & Co. Inc.'s current provision increased from 2009 to 2010 and from 2010 to 2011.
|
| Deferred provision |
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. |
Merck & Co. Inc.'s deferred provision declined from 2009 to 2010 and from 2010 to 2011.
|
| Taxes on income |
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. |
Merck & Co. Inc.'s taxes on income declined from 2009 to 2010 but then slightly increased from 2010 to 2011.
|
Effective Income Tax Rate (EITR)
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Merck & Co. Inc., effective income tax rate (EITR) reconciliation
Source: Based on data from Merck & Co. Inc. Annual Reports
| Item |
Description |
The company |
| Effective tax rate |
A ratio calculated by dividing the reported amount of income tax expense attributable to continuing operations for the period by GAAP-basis pretax income from continuing operations. |
Merck & Co. Inc.'s effective tax rate increased from 2009 to 2010 but then declined significantly from 2010 to 2011.
|
Deferred Tax Assets (Liabilities), Net
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Merck & Co. Inc., deferred tax assets (liabilities), net
Source: Based on data from Merck & Co. Inc. Annual Reports
| Item |
Description |
The company |
| Gross deferred tax assets |
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. |
Merck & Co. Inc.'s gross deferred tax assets declined from 2009 to 2010 but then slightly increased 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. |
Merck & Co. Inc.'s deferred tax assets declined from 2009 to 2010 but then slightly increased from 2010 to 2011.
|
| Net deferred income taxes |
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. |
Merck & Co. Inc.'s net deferred income taxes increased from 2009 to 2010 and from 2010 to 2011.
|
