If a Company's Deferred Tax Asset Is Not Reduced by a Valuation

question 124

Multiple Choice

If a company's deferred tax asset is not reduced by a valuation allowance, the company believes it is more likely than not that:

• A)Sufficient financial income will be generated in future years to realize the full tax benefit.
• B)Sufficient financial and taxable income will exist in future years to realize the full tax benefit.
• C)Sufficient taxable income will be generated in future years to realize the full tax benefit.
• D)Tax rates will not change in future years.

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Definitions:

Wage-Rate Compression

Compression of differentials between job classes, particularly the differential between hourly workers and their managers.

Employee Morale

The overall outlook, satisfaction, and confidence that employees feel towards their work and workplace environment.

Absenteeism

The habitual or frequent absence from work or duties without good reason, which can impact organizational productivity and morale.

Indirect Compensation

Benefits given to employees that are not paid directly as cash but contribute to their overall remuneration, such as insurance or retirement plans.