Jalavoux carries a deferred tax asset of 160,000 on deductible differences, still covered by reversals of taxable differences (data), and of 140,000 on losses carried forward. The loss of a contract leaves only 40% of the asset on losses probably recoverable (case assumption). Record the closing entry.
- Asset on deductible differences (still covered)
- 160,000
- Asset on losses before review
- 140,000
- Share of the asset on losses still recoverable (%)
- 40 %