All of the Following Are Evidence to Support Recognition of a Deferred

question 81

Multiple Choice

All of the following are evidence to support recognition of a deferred income tax benefit except:

• A)An excess of fair value over the tax basis of the enterprise's net assets in an amount sufficient to realize the deferred income tax asset.
• B)There are existing taxable temporary differences to absorb the loss.
• C)It is acceptable industry practice to recognize the deferred income tax benefit.
• D)A strong earnings history suggesting that losses are not expected to continue.

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Definitions:

Average Costing

A method of inventory valuation where the cost of goods sold and ending inventory values are determined by averaging the cost of all similar items in the inventory.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the number of outstanding shares.

Earnings Per Share

Earnings Per Share (EPS) is a measure of a company's profitability, calculated as net income divided by the number of outstanding shares.

Legal Capital

The portion of a company's capital, represented by the par value of its issued shares, that cannot legally be distributed to shareholders as dividends.