The Accounting Recognition of the Benefit from a Tax Loss

question 2

Multiple Choice

The accounting recognition of the benefit from a tax loss carryforward in most situations should be reported as

• A)A reduction of the loss in the year of the loss with an appropriate valuation allowance
• B)A prior period adjustment in whichever year the benefit is realized
• C)An extraordinary item in the year in which the benefit is realized
• D)An item on the retained earnings statement,not the income statement

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Definitions:

Classical Conditioning

The process of learning through the repeated association of two stimuli; a response that at first is initiated by the second stimulus, but eventually is initiated by the first stimulus alone.

Maturation

A developmental process involving physical, behavioral, or emotional growth, typically following a natural and sequential pattern.

Learning

The process of acquiring new understanding, knowledge, behaviors, skills, values, attitudes, and preferences through study, experience, or teaching.

Experiences

Refers to the events or occurrences that leave an impression on someone, encompassing both the subjective perception and the objective event.