As discussed in the chapter, companies must consider all positive and negative information in determining whether a deferred tax asset valuation allowance is needed.

Instructions Examine the balance sheets and income tax footnotes for two companies that have recorded deferred tax assets, and answer the following questions with regard to each company.

(a) What is the gross amount of the deferred tax asset recorded by the company? Express this amount as a percentage of total assets.

(b) Did the company record a valuation allowance? How large was the allowance?

(c) What evidence, if any, did the company cite with regard to the need for a valuation allowance? Do you consider the company’s disclosure to be adequate?