Zimt AG presents its fi nancial statements in accordance with US GAAP. In 2007, Zimtdiscloses a valuation allowance of $1,101 against total deferred tax assets of $19,201. In2006, Zimt disclosed a valuation allowance of $1,325 against total deferred tax assets of$17,325. Th e change in the valuation allowance most likely indicates that Zimt’s:A . deferred tax liabilities were reduced in 2007.B . expectations of future earning power has increased.C . expectations of future earning power has decreased.

Zimt AG presents its fi nancial statements in accordance with US GAAP. In 2007, Zimtdiscloses a valuation allowance of $1,101 against total deferred tax assets of $19,201. In2006, Zimt disclosed a valuation allowance of $1,325 against total deferred tax assets of$17,325. Th e change in the valuation allowance most likely indicates that Zimt’s:A . deferred tax liabilities were reduced in 2007.B . expectations of future earning power has increased.C . expectations of future earning power has decreased.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter3: Taxes On The Financial Statements

Section: Chapter Questions

Problem 2P

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