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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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When does a corporation establish a valuation allowance? Give an example of positive evidence that might be used to justify that a valuation allowance is not needed.

To determine

Explain the situation under which a company creates a valuation allowance and cite an example of positive evidence that might validate that a valuation allowance is not required.

Explanation

Valuation Allowance: Valuation allowance is that financial item that offsets the deferred tax assets either fully or partly as deferred tax assets are more likely not realizable.

A company establishes valuation allowance, in case based on the available evidence; it is more likely th...

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