When Assessing Realizability of Deferred Tax Assets, Management Must Consider

question 3

Multiple Choice

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

• A) existing contracts or firm sales backlog
• B) a carryback or carryforward period that is so brief it could limit realization of tax benefits
• C) taxable income in prior carryback year(s) if carryback is permitted under the tax law
• D) a strong earnings history exclusive of the loss that created the future deductible amount

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Definitions:

Perceiving Types

Individuals who prefer flexibility and spontaneity in their approach to life and decision-making, as opposed to a structured or planned approach.

Myers-Briggs

A personality inventory that categorizes individuals into 16 personality types based on their preferences in perceiving the world and making decisions.

Flexible Lives

The ability to adapt to changes and challenges in one’s personal and professional life with ease.

Minnesota Multiphasic Personality Inventory (MMPI)

A standardized psychometric test of adult personality and psychopathology.