If a Company's Deferred Tax Asset Is Not Reduced by a Valuation

question 151

Multiple Choice

If a company's deferred tax asset is not reduced by a valuation allowance, the company believes it is:

• A) Probable that sufficient taxable income will be generated in future years to realize the full tax benefit.
• B) Probable that sufficient financial income will be generated in future years to realize the full tax benefit.
• C) More likely than not that sufficient taxable income will be generated in future years to realize the full tax benefit.
• D) More likely than not that sufficient financial income will be generated in future years to realize the full tax benefit.

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Definitions:

New York Mets

A professional baseball team based in New York City, part of the National League division of Major League Baseball.

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services for profit.

Factor Market

The marketplace where services of the factors of production (notably land, labor, capital) are bought and sold.

Resources Exchanged

The process through which different types of resources, including goods, services, information, and money, are traded or swapped among individuals, businesses, or countries.