With losses mounting at many companies and forecasts offering scant hope for recovery, auditors are starting to ask hard questions about the deferred tax assets companies are reporting.
“This is definitely a big problem for companies right now,” says Rick Martin, vice president at Pluris Valuation Advisors.
A deferred tax asset is an asset on a company’s balance sheet based on the company’s expectation of a tax benefit to be claimed in the future. Its represents future deductions or net operating losses that can be carried forward to offset future earnings. Such assets arise because of differences between tax rules and accounting ...