Trueblood Case 13-11: Income Taxes – LOL

Case Facts: * Transaction Date: June 30, 2011 * Acquirer: LOL * Acquired: Sundance * LOL Tax Related Balances as of December 31, 2010 * $150mm Deferred Tax Asset * $105mm Valuation Allowance * Sundance Tax Related Balances as of Acquisition Date * $200mm Deferred Tax Asset * $200mm Valuation Allowance * Acquisition Date Decisions * Remove LOL Valuation Allowance of $105mm * Remove $150mm Valuation Allowance from Sundance books * Subsequent Information as of December 31, 2012 * Sundanced Valuation Allowance is unnecessary ($50mm)

Guidance Summary: * Both IAS 12 and ASC 740 “require income taxes to be accounted for using an asset and liability approach that recognizes current tax effects and expected future tax consequences of events that have been recognized for financial or tax reporting (i.e., deferred taxes) each period.” * The overall approaches are similar, but there are several significant differences * in the treatment of uncertain tax positions, * deferred tax assets and the related valuation allowances, * offsetting and classification, * deferred tax effects on outside basis of investments, and * disclosures.

| ASC740 | IAS12 | Recognition | More likely than not | Probable | Calculation | Enacted tax rates must be used | Enacted or ―substantively enacted‖ tax rates as of the balance sheet date must be used. | Classification / Presentation | Current or non-current classification, based on the nature of the related asset or liability, is required. | All amounts classified as non-current in the balance sheet. | Valuation Allowance | An entity records a full deferred tax asset and then reduces that recorded asset by a valuation allowance if realization of the asset is “more