Under U.S. GAAP, a deferred tax asset must be realized when:
A) realization is probable.
B) realization is possible.
C) realization is more likely than not.
D) realization is greater than 75% likely.

Question

Quizplus · Accepted Answer

According to ASC 740-10-30-4, "the recognition of deferred tax assets is based on the existence of sufficient taxable temporary differences or on the availability of tax carryforwards. A deferred tax asset shall be recognized for the deductible temporary differences and carryforwards if it is more likely than not that sufficient taxable income will be available to realize those assets." "More likely than not" is defined as a likelihood of more than 50 percent. Therefore, option C is the correct choice.

Under US GAAP, a Deferred Tax Asset Must Be Realized When