If a company's deferred tax asset is not reduced by a valuation allowance, the company believes it is: Multiple Choice More likely than not that sufficient taxable income will be generated in future years to realize the full tax benefit. Probable that sufficient taxable income will be generated in future years to realize the full tax benefit. More likely than not that sufficient financial income will be generated in future years to realize the full tax benefit. Probable that sufficient financial income will be genera

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Business

Darren West

27 May, 23:17

If a company's deferred tax asset is not reduced by a valuation allowance, the company believes it is: Multiple Choice More likely than not that sufficient taxable income will be generated in future years to realize the full tax benefit. Probable that sufficient taxable income will be generated in future years to realize the full tax benefit. More likely than not that sufficient financial income will be generated in future years to realize the full tax benefit. Probable that sufficient financial income will be genera

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Xavier Benitez · Answer 1

Probable that sufficient taxable income will be generated in future years to realize the full tax benefit.

Explanation:

If a company's deferred tax asset is not reduced by a valuation allowance, the company believes it is more likely than not that: Sufficient taxable income will be generated in future years to realize the full tax benefit.

A valuation allowance is a contra-account to a deferred tax asset account which shows the amount of deferred tax asset with a more than 50% probability of not being utilized in the future due to the non-availability of sufficient future taxable income. Valuation allowance is just like a provision for doubtful debts.