How Does an Auditor Determine Whether a Valuation Allowance Is

question 11

Essay

How does an auditor determine whether a valuation allowance is needed against an entity's deferred tax asset? List some of the factors than an auditor will consider in this regard.

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Definitions:

Lewis Structure

Representation of the distribution of electrons in molecules, showing how atoms are connected and where lone pairs of electrons are located.

Hydrogen Sulfide

A colorless, poisonous, flammable gas with the characteristic foul odor of rotten eggs; used in the manufacture of chemicals, in metallurgy, and as a fungicide and insecticide.

Lewis Structure

A graphical representation of molecules showing how valence electrons are distributed among atoms, and where dots and lines represent electrons and bonds, respectively.

Water

A molecule composed of two hydrogen atoms bonded to one oxygen atom, essential for all forms of life.