SFAS No.109 allows the recognition of deferred tax assets for both operating loss carryforwards and temporary differences arising from normal operations.This provision of SFAS No.109 represents a significant change from the requirements of SFAS No.96 and APB Opinion No.11 in which stringent limits were placed on the recognition of deferred tax assets.SFAS No.109 does require some recognition of the uncertainty associated with deferred tax assets,however.
Required:
Explain how SFAS No.109 addresses uncertainty associated with deferred tax assets and how the approach in SFAS No.109 compares with the approach adopted in SFAS No.5 regarding contingencies.

Question

Quizplus · Accepted Answer

The Answer of SFAS No.109 allows the recognition of deferred tax assets for both operating loss carryforwards and temporary differences arising from normal operations.This provision of SFAS No.109 represents a significant change from the requirements of SFAS No.96 and APB Opinion No.11 in which stringent limits were placed on the recognition of deferred tax assets.SFAS No.109 does require some recognition of the uncertainty associated with deferred tax assets,however.
Required:
Explain how SFAS No.109 addresses uncertainty associated with deferred tax assets and how the approach in SFAS No.109 compares with the approach adopted in SFAS No.5 regarding contingencies.

SFAS No109 Allows the Recognition of Deferred Tax Assets for Both