Under SFAS 109 when a company has a net operating loss carryforward:

Question

Quizplus · Accepted Answer

When a company has a net operating loss carryforward, a deferred tax asset is recorded, representing the future tax benefits that will be received when the company generates taxable income. However, a valuation allowance may need to be applied to reduce the deferred tax asset to the amount that is more likely than not to be realized. No deferred tax liability or equity account is recognized in this situation, and no receivable is created.

Under SFAS 109 When a Company Has a Net Operating