If the valuation allowance for a deferred tax asset is decreased, there is a(n) ________ to income tax expense, which is a(n) ________ to income tax benefit. Group of answer choices increase; decrease increase; increase decrease; decrease decrease; increase

If the valuation allowance for a deferred tax asset is decreased, there is a(n) to income tax expense, which is a(n) to income tax benefit. Group of answer choices increase; decrease increase; increase decrease; decrease decrease; increase

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter4: Gross Income: Concepts And Inclusions

Section: Chapter Questions

Problem 2DQ

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Question

If the valuation allowance for a deferred tax asset is decreased, there is a(n) ________ to income tax expense, which is a(n) ________ to income tax benefit.

Group of answer choices

increase; decrease

increase; increase

decrease; decrease

decrease; increase

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

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