About Deferred Tax assets and Valuation allowance sufficient, valuation, reading, depends

wonderfuldream

Hi,

After reading session 9 about deferred taxes, i have read a line that whether a firm is able to use its deferred tax assets depends if the taxable income is sufficient.

Lets say if a firm is making loss, will the firm use valuation allowance to reduce it deferred tax assets?

thanks

suyash1989

Well there needs to be a reasonable expectation of future profits in order to take advantage of previous losses. A real life example of this is Mayo vs. Citi right now.

amqata

its worth to remember that

FASB govern the rule based principle which limits the free space for interpret ist like YES or NO while IASB gives more freedom of choice

Read practice and read...

hariRaj

I think it depends on whether the company expects to earn profits in the future.