Misconception · MIS:valuation-allowance-erases-gross-dta

Mistaken idea “A valuation allowance erases the gross deferred tax asset”

Mistaken reasoning: This mistake loses the gross recognition and source detail.

Updated Aug 21, 2026 Review due Nov 8, 2026

Why this is mistaken

Retain gross deferred tax assets by source and a separate allowance rollforward; net presentation does not erase the underlying difference.

Where to watch

When this mistake may appear

  • A valuation allowance is needed.
Check your work

Your work may contain this mistake if:

  • Delete the underlying deferred tax asset and show only a net number.