sgupta0827

Miss*Yiota Wrote:
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> the question was as i said above, in substance
> (without copying it exactly). And the answer is
> that if carryng forward period are extended, then
> the valuation allowance account will decrease and
> then DTA increase because it is likely that the
> company will be able to use its DTA


I do see your logic. But look at it this way:
CA - TB = $200, Tax Rate = 50%
DTA = $100
Company thinks that it can use $60 out of this next year when its tax payable will be $60.
Val allowance = $40

Not Tax Rate decreases to 25%
CA - TB = $200
DTA = $50
Company's tax will be $30 next year instead of $60 so it can use only $30.
Val allowance = $20 (a decrease)

Is this wrong?