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The speaker may shed some light on how decisions are made about the need for an allowance account for deferred tax assets, the identification and measurement of uncertain positions, etc.
Thus, the analysis of valuation allowance changes is contextual and requires careful consideration of activity in the allowance account. This point underscores the deficiency in income tax reporting and the need for increased disclo sure in this area.
In this case, the firm credits Additional Paid-In Capital, and debits the valuation allowance account without affecting tax expense.
Valuation allowance account is a balance sheet account, similar to the allowance for doubtful accounts, used to adjust a deferred tax asset to its net realizable value.
Further, building up the loan-loss allowance account during good times and using part of the increase to absorb losses during economic downturns is not necessarily manipulating income from a regulatory perspective.
However, the loan loss allowance account is included in the numerator that calculates a credit union's risk based capital ratio, Fazio said, so it would be counted toward the ratio.
To the extent that the article did not make our position clear, we will try to add clarity here, focusing primarily on the two main issues addressed in the article: whether lower of cost or market (LCM) should be applied to individual items or at an aggregate level, and whether an allowance account should be used.
and Brandtjen & Kluge, Inc., the court in Berlin, TC Memo 1961-194, denied the taxpayer's bad-debt deduction on the grounds that his recorded entries neither credited the receivable account nor had "the effect of removing any part of the balances of accounts receivable from the book assets." The inference is that, had the taxpayer specifically identified an allowance account (or portion thereof) as offsetting the bad debt in question--as in Brandtjen & Kluge, Inc.--the court would have concluded that the taxpayer had effectuated a charge-off within the tax year and sustained the bad-debt deduction.
In addition, SBA could not explain significant declines in its loss allowance account for disaster loans.
There is also increasing unease among executive members about the pounds 25,000 from Haughey's allowance account, for party expenses such as research and staff, which ended up in a Guinness and Mahon account for his own private use.
In particular, the district court and the Eighth Circuit found that the KPERS auditors had warned KPERS as early as 1987 and 1988 that its direct placement investments were partially impaired and that it needed to establish an investment allowance account to protect it against such impairments.
121 concerning whether an allowance account should be utilized when recognizing asset impairment in the held for sale category of noncurrent assets, since the declines in value in these assets are subject to recovery, practitioners probably should consider using an allowance account to offset any loss recognized in income.)
If separate disclosure is retained in the final statement, TEI recommends that the disclosure of changes in the valuation allowance should be limited to material changes in the allowance account.
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