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EXCEL - IDEA: XBRL DOCUMENT - EARTH DRAGON RESOURCES INC.Financial_Report.xls
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EX-31.1 - CERTIFICATION - EARTH DRAGON RESOURCES INC.ex311.htm
EX-32.1 - CERTIFICATION - EARTH DRAGON RESOURCES INC.ex321.htm
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v2.4.0.6
Income Taxes
3 Months Ended
Aug. 31, 2011
Income Tax Disclosure [Abstract]  
Income Taxes

 

8. Income Taxes

The provision for (benefit from) income taxes differs from the amount computed by applying the statutory United States federal income tax rate of 35% to income (loss) before income taxes. The sources of the difference follow:

     
Period from
 
 
For the three months ended
 
October 23, 2007
 
 
August 31,
 
(Date of Inception) to
 
   
2011
   
2010
 
August 31, 2011
 
Expected tax at 35%
 
$
(37,846
)
 
$
(1,509
)
 
$
(230,885
)
Nondeductible accretion of debt discount
   
8,218
     
-
     
8,218
 
Increase in valuation allowance
   
29,628
     
1,509
     
222,667
 
Income tax provision
 
$
-
   
$
-
   
$
-
 
Significant components of the Company’s deferred income tax assets are as follows:

   
August 31, 2011
   
May 31, 2011
 
Net operating loss carryforward
 
$
222,667
   
$
193,039
 
Valuation allowances
   
(222,667
)
   
(193,039
)
Net deferred income tax assets
 
$
-
   
$
-
 
 
Based on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset of $222,667 at August 31, 2011 attributable to the future utilization of the net operating loss carryforward of $636,192 will be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements. The Company will continue to review this valuation allowance and make adjustments as appropriate. The $636,192 net operating loss carryforward expires $14,392 in year 2028, $84,167 in year 2029, $23,969 in year 2030, $429,013 in year 2031and $84,651 in year 2032.
 
Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.