Question

Due to years of poor management, Shao Inc. had $350 million in Deferred Tax As of 2012, Shao had a Valuation Allowance of $280 million related to these DTAS. In which quickly returned to profitability. At the end of 2013, Shao decided that it w enough to use the NOLS in Liechtenstein by 2014 and made the appropriate adju Which of the following items would be increased by the adjustment to the Valuat​

Answer 1

The adjustment to the Valuation Allowance would decrease the amount of the allowance and increase the Deferred Tax Assets on the balance sheet.

Step-by-step explanation:

The adjustment to the Valuation Allowance would increase the Deferred Tax Assets (DTAs) on Shao Inc.'s balance sheet.

When Shao Inc. returned to profitability, it was able to utilize its net operating loss carryforwards (NOLs) in Liechtenstein to offset future tax liabilities. This resulted in a decrease in the need for the Valuation Allowance.

By making the appropriate adjustment to the Valuation Allowance, it would reduce the amount of the allowance, which in turn would increase the Deferred Tax Assets on the balance sheet.