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Use "Note 10-Income Taxes" from CVS's 2016 Annual Report to help answer the following questions. This note provides details on the ending balances in deferred tax assets and liabilities from each source of temporary difference. These details appear at the top of page 80 of the Annual Report (page 82 of the pdf file). Assume that CVS has a corporate income tax rate of 35% Which method of depreciation and amortization has been more accelerated on average - the method CVS used for book purposes or the method CVS used for tax purposes? Estimate ho much more total depreciation and amortization expense to date has been incurred as of the end of 2016 under the method you've said is more accelerated. Use your answer to part (a) to calculate what Total Assets reported for 2016 on CVS's balance sheet would have been if CVS had always used the same depreciation and amortization methods for financial reporting purposes that they currently use for tax purposes b) c) Consider the items listed below and indicate whether the item would typically result in a deferred tax liability (DTL), a deferred tax asset (DTA), or neither (NONE) on CVS's 2016 balance sheet. Businesses such as CVS are routinely subject to lawsuits related to customers, employees, competitors, intellectual property, and shareholders. CVS is required to assess ongoing litigation and record any probable losses. Imagine that during 2016, CVS decided to accrue a $30 million liability related to expected losses from ongoing lawsuits. These amounts relate to lawsuits that had not been settled by the end of 2016 and CVS had not yet made any actual payments on these estimated amounts. Assume that these expected losses were recorded as financial accounting expenses in 2016, but will not be deductible for tax purposes until they are actually paid in the future. CVS invests in municipal bonds. Interest revenue from these investments are included in financial (i.e., book) income for 2016 but are considered a tax-exempt source of revenue. ii. ii. For financial reporting purposes, CVS must report an estimate for bad debt expense at the point of credit sales. However, for tax purposes bad debts are not tax deductible until specific accounts are later deemed uncollectible and those specific accounts are written off. Note: I'm asking you about the deferred taxes on the balance sheet from their accounting for bad debts, not the credit sales themselves (credit sales are typically included in both financial and taxable income as soon as they are made)

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