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Income Taxes | 6 Months Ended
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Jun. 30, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | 10. Income Taxes (a) Income Tax Expense For the three months ended June 30, 2023, the Company recorded income tax expense of $3.5 million (2022 — $3.1 million). For the three months ended June 30, 2023, the Company’s effective tax rate differs from the combined Canadian federal and provincial statutory income tax rate due to the following factors:
| Three Months Ended |  |  | Three Months Ended
| June 30, 2023 |  |  | June 30, 2022
(In thousands of U.S. Dollars, except rates) | Amount |  |  | Rate |  |  | Amount |  |  | Rate
Income tax (expense) benefit at combined statutory rates | $ | (3,465 | ) |  | 26.5% |  |  | $ | 296 |  |  | 26.5%
Adjustments resulting from: |  |  |  |  |  |  |  |  |  |
Increase in valuation allowance |  | (74 | ) |  | 0.6% |  |  |  | (5,426 | ) |  | (485.3%)
Shortfall tax benefits related to share-based compensation |  | — |  |  |  | — |  |  |  | (23 | ) |  | (2.1%)
Changes to tax reserves |  | (291 | ) |  | 2.2% |  |  |  | (251 | ) |  | (22.5%)
Changes to deferred tax assets and liabilities resulting from audit and other tax return adjustments |  | (179 | ) |  | 1.4% |  |  |  | 2,497 |  |  | 223.4%
Other |  | 548 |  |  | (4.2%) |  |  |  | (226 | ) |  | (20.2%)
Income tax expense | $ | (3,461 | ) |  | 26.5% |  |  | $ | (3,133 | ) |  | (280.2%)
For the three months ended June 30, 2023, the Company recorded an additional $0.1 million (2022 — increase of $5.4 million) valuation allowance against deferred tax assets. The valuation allowance includes an increase of $1.4 million in reporting entities where management cannot reliably forecast that sufficient future tax liabilities will arise. Accordingly, the tax benefit associated with the current period losses in these reporting entities is not reflected in the Company’s Condensed Consolidated Statements of Operations. The valuation allowance is partially offset by a decrease of $1.3 million related to the recognition of certain losses in IMAX China Holding, Inc. (“IMAX China”) that management now considers to be realizable. For the six months ended June 30, 2023, the Company recorded income tax expense of $8.3 million (2022 — $5.7 million). For the six months ended June 30, 2023, the Company’s effective tax rate differs from the combined Canadian federal and provincial statutory income tax rate due to the following factors:
| Six Months Ended |  | Six Months Ended
| June 30, 2023 |  | June 30, 2022
(In thousands of U.S. Dollars, except rates) | Amount |  |  | Rate |  | Amount |  |  | Rate
Income tax (expense) benefit at combined statutory rates | $ | (6,117 | ) |  | 26.5% |  | $ | 2,772 |  |  | 26.5%
Adjustments resulting from: |  |  |  |  |  |  |  |  |
Increase of valuation allowance |  | (1,684 | ) |  | 7.3% |  |  | (10,435 | ) |  | (99.8%)
Shortfall excess tax benefits related to share-based compensation |  | (83 | ) |  | 0.4% |  |  | (152 | ) |  | (1.5%)
Changes to tax reserves |  | (549 | ) |  | 2.4% |  |  | (411 | ) |  | (3.9%)
Changes to deferred tax assets and liabilities resulting from audit and other tax return adjustments |  | (179 | ) |  | 0.8% |  |  | 2,497 |  |  | 23.9%
Other |  | 266 |  |  | (1.2%) |  |  | (14 | ) |  | (0.1%)
Income tax expense | $ | (8,346 | ) |  | 36.2% |  | $ | (5,743 | ) |  | (54.9%)
As of June 30, 2023, the Company’s Condensed Consolidated Balance Sheets include deferred income tax assets of $11.5 million, net of a valuation allowance of $64.5 million (December 31, 2022 — $9.9 million, net of a valuation allowance of $62.9 million). A net increase of $1.7 million in the valuation allowance recorded in the six months ended June 30, 2023, includes an increase of $3.0 million in reporting entities where management cannot reliably forecast that sufficient future tax liabilities will arise. Accordingly, the tax benefit associated with the current period losses in these reporting entities is not reflected in the Company's Condensed Consolidated Statements of Operations. The valuation allowance is partially offset by a decrease of $1.3 million related to the recognition of certain losses in IMAX China that management now considers to be realizable. The valuation allowance is determined at the level of each reporting entity and is expected to reverse at the point in time when management determines it is more likely than not that the reporting entity will incur sufficient tax liabilities to allow it to utilize the deferred tax assets against which the valuation allowance is recorded. As of June 30, 2023, the Company’s Condensed Consolidated Balance Sheets also include deferred tax liabilities of $13.6 million (December 31, 2022 — $14.9 million). (b) Income Tax Effect on Other Comprehensive (Loss) Income For the three and six months ended June 30, 2023 and 2022, the Income Tax (Expense) Benefit related to the components of Other Comprehensive (Loss) Income (“OCI”) is as follows:
| Three Months Ended | Six Months Ended |
|  | June 30, |  |  | June 30, |
(In thousands of U.S. Dollars) |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Unrealized change in cash flow hedging instruments |  | $ | (180 | ) |  | $ | 159 |  |  |  | $ | (215 | ) |  |  | $ | 77 |
Realized change in cash flow hedging instruments |  |  | (32 | ) |  |  | (17 | ) |  |  |  | (121 | ) |  |  |  | (25 | )
Defined benefit and postretirement benefit plans |  |  | 46 |  |  |  | (12 | ) |  |  |  | 92 |  |  |  |  | (24 | )
|  | $ | (166 | ) |  | $ | 130 |  |  |  | $ | (244 | ) |  |  | $ | 28 |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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