Under SFAS 109 When a Company Has a Net Operating

question 51

Multiple Choice

Under SFAS 109 when a company has a net operating loss carryforward:

• A)A deferred tax liability is recognized.
• B)A receivable is created.
• C)A deferred tax equity account is created.
• D)A deferred tax asset is recorded along with any applicable valuation allowance.

---

Definitions:

Investment Funds

Pooled funds from investors that are managed by professionals and invested in a diversified portfolio of assets to earn returns.

Capital Investment

Expenditure on assets that are expected to produce benefits over a long period, such as buildings, machinery, and equipment.

Internal Rate

Often referred to in the context of Internal Rate of Return (IRR), it represents the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Capital Investment

Funds invested in a business or project with the expectation of generating income or profit, often involving the purchase of physical assets.