Which of the Following Items Indicate That a Company Does

question 43

Multiple Choice

Which of the following items indicate that a company does not need a valuation allowance?

• A) existing sales contracts that will produce sufficient income to realize the deferred tax asset
• B) excess of appreciated asset value over tax basis sufficient to realize the deferred tax asset
• C) a strong history of earnings without considering the deferred tax asset
• D) All of the above are correct.

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Definitions:

Residual Value

The estimated value of a fixed asset at the end of its useful life, reflecting what it could be sold for or its disposal cost.

Depreciation

An accounting method of allocation that spreads the cost of an asset over its useful life to account for its decrease in value over time.

Book Value

The net value of a company's assets minus its liabilities, often used to assess a company's worth.

Impaired Goodwill

The decrease in the value of a company's goodwill, often due to adverse changes in the business or market conditions, requiring a write-down in accounting.