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A microfinance bank in India has reported a deferred tax asset (DTA) of $1.2 million on its balance sheet. Due to new banking reforms
A microfinance bank in India has reported a deferred tax asset (DTA) of $1.2 million on its balance sheet. Due to new banking reforms and tight monetary policies, the bank has consistently reported a decline in earnings. After the most recent taxable income of $200,000, the firm believes it will have a further decline of 35% in its taxable income consistently. Assuming that the firm also believes that its tax assets will not be realized at the same rate, then the amount of valuation allowance is closest to: a) $70,000 b) $420,000 c) $780,000
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