When Assessing Realizability of Deferred Tax Assets, Management Must Consider

question 121

Multiple Choice

When assessing realizability of deferred tax assets, management must consider positive and negative evidence. All of the following would be considered positive evidence except ________.

• A) taxable income in prior carryback year(s) if carryback is permitted under the tax law
• B) future reversals of existing taxable temporary differences
• C) unsettled circumstances that could adversely affect future operations
• D) an excess of appreciated asset value over the tax basis of the entity's net assets

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Definitions:

Productive Efficiency

Productive efficiency occurs when an economy is operating at its maximum capacity, producing goods and services at the lowest possible cost per unit.

Marginal-Cost-Marginal-Benefit Rule

The marginal-cost-marginal-benefit rule states that optimal decision-making occurs when the marginal cost of an action equals its marginal benefit, ensuring efficient resource allocation.

Optimal Project Size

The most efficient scale of a project, considering factors like cost, resources, and expected benefits, to achieve the best possible outcome.

Marginal Costs

The cost uplift realized by the manufacture of an extra unit of a product or service.