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:

In-Group/Out-Group Bias

The tendency to favor members of one's own group over those in other groups, leading to preferential treatment and judgment.

Anger

An emotional state that may range from minor irritation to strong rage, often triggered by perceived wrongs or injustices.

Fundamental Attribution Error

A cognitive bias that involves overattributing others' behaviors to their personal characteristics while underestimating situational factors.

Extenuating Circumstances

Conditions or factors that lessen the severity or culpability in a situation or a criminal act.