Final answer:
The accounting treatment for the unlikelihood of realizing a portion of a deferred tax asset requires a debit to a valuation allowance account and a credit to the Deferred Tax Asset account. This is similar to creating an allowance for doubtful accounts but specific to tax assets.
Step-by-step explanation:
The deferred tax asset:
Carson's accounting for the likelihood that a portion of the deferred tax asset will not be realized involves creating an allowance to account for this. The correct journal entries would be a debit to a valuation allowance account and a credit to the Deferred Tax Asset account. The entries would look like this: Debit to Valuation Allowance (or Similar Account) The use of an allowance account is similar in concept to the Allowance for Doubtful Accounts, but it is related to tax assets, not receivables. Therefore, the specific title of the account debited might be "Valuation Allowance for Deferred Tax Assets" or something similar, but not Allowance for Doubtful Accounts, which is specifically used for receivables. This journal entry is made because the accountant has determined that it is more likely than not that $3,000 of the deferred tax asset will not be realized and will need to be written off. By debiting the Deferred Tax Asset and crediting the Allowance for Doubtful Accounts, the entry recognizes the decrease in the value of the asset and reflects the estimation of the expected loss.