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Question
Both IFRS and U.S. GAAP require that a valuation allowance when it is deemed more likely than not (greater than 50% likelihood) that the deferred tax asset will not be realized.
Answer
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Because covenant compliance can be jeopardized by mandated changes in accounting principles, many loan agreements have financial covenants that rely on the accounting rules in place when the loan is first granted.
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A. High earnings per share.
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C. all operating costs, depreciation, taxes, and a fair return on invested capital.
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B. affirmative covenants.
C. negative restrictions.
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A. lenders.
B. borrowers.
C. both lenders and borrowers.
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