Amgen and Gilead Comparison

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Liqi wang
Accounting
Income tax

Both Amgen and Gilead are fully disclosed the income tax information according to GAAP requirements. Both companies recorded income tax in financial statement such as income statement and specified the detailed components of income taxes. Amgen recorded income tax based on pretax income, applicable tax rate and tax planning opportunities available in various jurisdictions. Gilead’s income provision was computed under liability method. Both companies is using single-step format and specified the operating income, but Amgen was recorded in millions while Gilead was recorded in thousands. In the footnote, both Amgen and Gilead distinguished the income tax by time (current and deferred) and grade (federal, state and foreign). They also distinguished tax assets from tax liability. Not only they both stated the effective tax rate for year 2011, but also they disclosed the effective rate in 2010 and 2009. I think Amgen was more informative in this part. Gilead used a chart to disclose the difference between the provision for income taxes and the amount computed by applying U.S federal statuary income tax rate to income before provision of income taxes. Amgen used footnote 18 to talk about how the effective tax rate come from. From this footnote, I can see how significant the Puerto Rico exercise tax rate to the total effective tax rate. Moreover, Amgen disclosed the AOCI in a chart to specify the income tax expense or benefit for unrealized gains and losses and the related reclassification adjustment to income for cash flow hedge. If I need to analysis income tax, first I need to know what method the company use to record the income tax. For example, Gilead’s income provision was computed under liability method. Second, I need to know what is the effective tax rate, including the previous tax rate. For example, in Amgen’s report, it stated that because the Puerto Rico excise tax, it...
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