This Financial Reporting Insights is intended to be used as a resource in understanding and analyzing the realizability or recoverability of deferred tax assets. The realization of deferred tax assets is evaluated using the more-likely-than-not standard, (i.e. a valuation allowance would be recognized if it is more-likely-than-not that some or all of the deferred tax asset will not be realized). FASB Accounting Standards Codification (ASC) 740, Income Taxes, outlines the sources of taxable income and types of evidence to consider when determining whether to record a valuation allowance. A valuation allowance is an estimate that requires careful consideration of all facts and circumstances.
This publication does not address every aspect of accounting for income taxes and should therefore be read in conjunction with ASC 740, Income Taxes.
