1. Identify the objectives of accounting for income taxes.
2. What is the rationale for the argument that long-term deferred tax liabilities should be excluded from liabilities when computing the debt-to-equity ratio?
3. What would be the effect on Macy’s debt-to-equity ratio of excluding deferred tax liabilities from its calculation? What would be the percentage change?
4. What might be the rationale for not excluding long-term deferred tax liabilities from liabilities when computing the debt-to-equity ratio?
Below is the powerpoint attached to answer the questions.