Hot,Inc.'s primary competitor is Cold,Inc.When comparing relative deferred tax asset and liability accounts with Cold,which of the following should Hot do?

Question

Quizplus · Accepted Answer

Scaling the deferred tax assets and liabilities by total sales or total assets will provide a more accurate comparison between Hot and Cold, as it takes into account the size and scope of both companies. Comparing raw dollar amounts could be misleading if one company is significantly larger than the other. Ignoring deferred tax assets and liabilities or focusing only on the effective tax rate or current tax expense would not provide a complete picture of the companies' tax positions.

Hot,Inc'S Primary Competitor Is Cold,Inc