Question 14 An analyst is reviewing a company with a large deferred tax asset on its balance sheet. The CFA has determined that the firm has had cumulative losses for the the last three years and has a large amount of inventory that can only be sold at sharply reduced prices. Which of the following adjustments should the analyst make to account for the deferred tax assets? Record a deferred tax liability to offset the effect of the deferred tax asset on the firm's balance sheet Recognize a valuation allowance to reflect the fact that the deferred tax asset is unlikely to be realized Do nothing. The difference between taxable and pretax income that caused the deferred tax asset is likely to reverse in the future