A Valuation Allowance Is Recorded Against a Deferred Tax Asset

question 71

Multiple Choice

A valuation allowance is recorded against a deferred tax asset when:

• A) It is probable that the deferred tax asset will not be realized in the future.
• B) It is more likely than not that the deferred tax asset will not be realized in the future.
• C) It is highly likely the deferred tax asset will not be realized in the future.
• D) It is remote the deferred tax asset will not be realized in the future.

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Definitions:

Cocoa

A powder made from roasted and ground cacao seeds, used in making chocolate, as well as some beverages and baked goods.

Dormancy

Period of temporarily suspended metabolism.

Metabolic Activity

The set of life-sustaining chemical transformations within the cells of living organisms.

Germination

The process by which a plant grows from a seed or spore after a period of dormancy.