DTA
This section mentions that the DTA is the largest single source of nonadmitted assets...but I feel every exam question I have come across thus far just assumed it is fully admitted. Do you know of/recall anywhere that explains how the DTA is divided into admitted/nonadmitted portions?
Comments
Have a look at Table 2 on page 28 of Odomirok. Nonadmitted assets is a very small portion of all assets. While nonadmitted DTA is a more significant portion of all DTA, DTA itself is only 1% of all assets.
In other words, this is not a very significant balance sheet item. This makes it likely that it be treated as all admitted in the exam and a treatment of its split to non-admitted not be provided in the syllabus.
thanks!
Can you explain how difference in statutory and tax accounting for loss reserves results in a tax benefit?
The difference between statutory and tax accounting's discounting of loss reserves most likely results in higher taxes for the period in question. However, the unwinding of this discount in future periods brings tax benefits, which are measured in DTA.