Asked by Amaya Jones on Jun 17, 2024
Verified
The determination of whether or not a valuation allowance is necessary is based on subjective assessment.
Valuation Allowance
A reserve created to account for future tax benefits which may not be realized due to insufficient future taxable income.
Subjective Assessment
An evaluation based on personal judgment rather than quantifiable evidence, often used in scenarios where objective measures are difficult to apply.
- Acquire knowledge regarding the valuation allowance and its influence on the cost of income tax.
Verified Answer
JL
Jerry LlanosJun 24, 2024
Final Answer :
True
Explanation :
The determination of whether or not a valuation allowance is necessary is based on subjective assessment, as it requires judgement and estimation of future events and uncertainties.
Learning Objectives
- Acquire knowledge regarding the valuation allowance and its influence on the cost of income tax.