Discussion Post
A valuation allowance operates as a "contra account" to the deferred tax assets on the balance sheet. If a company determines that it is more likely than not (a likelihood greater than 50%) that some portion or all of the deferred tax assets will not be realized in a future period (that is, reduce future taxable income or future tax liability), the company must offset the deferred tax assets with a valuation allowance to reflect the amount it does not expect to realize in the future. What is the difference between recognition and realization as it applies to the recording of a deferred tax asset on a balance sheet?
The response must include a reference list. Using one-inch margins, double-space, Times New Roman 12 pnt font and APA style of writing and citations.