Question

ABC Corp. expects that a significant portion of its deferred tax assets will not be realized. Which section of the Accounting Standard Codification should ABC consult to determine whether a valuation allowance should be established for this asset? Enter your response in the answer fields below. Guidance on correctly structuring your response appears above and below the answer fields. Unless specifically requested, your response should not cite implementation guidance.

Type the topic here. Correctly formatted FASB ASC topics are 3 digits. FASB ASC Some examples of correctly formatted FASB ASC responses are 205-10-05-1, 323 740-S25-1, 260-10-60-1A, 715-30-35-95, 820-10-35-16BB, 810-10-55-205AE, 815-10- 50-4EEE, and 815-10-50-4EEEE

Answer 1

The section ASC 360 - 10 i.e Accounting standard codification 360 - 10 is required for the valuation of deferred taxes of assets. The full text of ASC - 360 is found in the property, plant, equipment (PPE).

ASC - 360 comprises of 2 sub topics namely overall and real estate sales of assets. The overview of each sub topic is as follows,

ASC 360 - 10 Overall :

  It provides guidance on property, plant and equipment and the related accumulation of those assets. This also includes the impairment or disposal of long lived assets i.e long lived tangible assets like land, land improvements, buildings, furniture and fixtures, machinery and equipment.

ASC 360 - 20 - Real estate sales :

It provides guidance for the sale of real estate land other than retail land. It is placed here as it is applicable for all the real estate sales transaction.

hence the ABC Corp, should consult a Accounting standard codification ASC - 360 to determine whether a valuation allowance should be established for the asset.